Are We About to Have a New Crash in the Stock Market?

Monday, 2/22/21, was a rough day for the stock market. Almost every company in every industry on the tickers were red, from tech to automotive to retail, red EVERYWHERE. An example of the huge changes was Tesla starting Monday’s trading around $771 per share but by the end of the day it would drop to around $650. Many companies, especially in the tech sector, have had a rough week. Throughout the week, the market has started to somewhat settle, but if you look over the past 1-3 months, many companies are on a downward slope coming off record high prices. What is causing this huge downturn in the market?

The post Covid-19 boom is getting people excited about the possibility of being able to live life normally again. This excitement along with the increased availability of the Covid-19 vaccine has made people optimistic about companies being able to open up and operate like normal. This has caused people to invest back into recently forgotten industries such as retailers, airlines, cruise lines, hotels, and casinos which may have driven the market up prematurely. Since most of those industries are still not operating at full potential due to Covid-19 restrictions, this has led to large sell offs.

Another big factor potentially causing the downturn is fears of inflation and rising interest rates. When interest rates rise, people usually spend less and save more. The fact that the government has been giving away multiple stimulus packages and has plans to continue doing so has raised concerns about inflation because so much money has been created and pumped into the system. Raising interest rates is usually how the federal government would keep inflation low, by essentially encouraging saving instead of spending. This fear has caused the Federal Reserve Chairman, Jerome Powell, to come out on Wednesday and tell Congress that the central bank will not raise interest rates until they believe they have reached their goals on maximum employment and inflation.

When Federal Reserve Chairman, Jerome Powell, said they will not raise interest rates, this caused a sigh of relief on the stock market and trading and prices have started to go back up over the past couple days. The question now is how long will interest rates stay low and is it better to buy stocks now during higher volumes of trading or wait for prices to drop when interest rates do actually rise? Let me know your thoughts and leave a comment, are you investing now or waiting?

Author: vancealm

Working as a manager within two of the largest retail companies for the past 7 years has given me insight into consumer trends and essentially what people are buying on a normal basis. Why is that useful? Because it gives me a better understanding of the established and growing brands and companies that could potentially work to make YOU money. My name is Vance Alm and I am currently working on earning my MBA from the University of Nevada, Reno. I want to talk, teach, and find out more about investing in the stock market. Recently, there has been a lot of news around the stock market, hedge funds, and normal retail investors which has reignited the nation’s curiosity about investing their money. A lot of people want to be involved with the excitement of potentially making money by investing in the stock market, but they don’t know how or even where to begin. I want to explore the world of investment banking with you and talk about everything involved, from researching different companies to invest in, to the different online platforms or financial service companies you can use and everything in between. I am not a wealthy hedge fund manager and I am not an expert in the field, but I am passionate about the idea of having your money work for you. I am always learning more on the topic and I want to open the conversation on how to start investing and what companies to potentially invest in.

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