Stock Market Slide Continues: When Will It End?
Following the worst week for the New York Stock Exchange since 2016 which saw the Dow slide 500 points, the slide continued into the new week with the worst single day slide since 2011 dropping the Dow 1100 points.
After a strong 2017 which saw nothing but growth and new record highs, many expected some form of a correction to come at some point in 2018. But the real question is when will it stop? And how far will it fall? Are we looking at a correction, or a crash?
Rising inflation, bond yields and volatility in the markets have combined for the unsettling aura around U.S investments, stock market not excluded. While this concoction of issues will lead to a more turbulent 2018 than previous years, a crash similar to the one that led to the Great Recession is unlikely.
Unlike the sub-prime loans and the housing bubble that created an actual crisis, much of the recent volatility is based off of speculation and driven by fear. While inflation is a likely issue some point down the road, 2018 does not project to be that year.
With our national debt constantly on the rise and some investors beginning to pull out their money, our 20 trillion dollars and growing national debt most likely will come back to shoot us and inflation will be the bullet. But thats not in 2018.
The Feds inability to handle the current inflation crisis creeping in is one of the major driving factors to the latest slide. A general feeling after their latest vote to leave interest rates the same has led many investors to believe the Fed isn't quite sure what to do.
Its no coincidence this recent slide came after their most recent meeting. Top that with a new incoming chair and investors really have no clue what to expect the Federal Reserve to do moving forward even as whispers of a rate hike next vote permeates.
All this said, one should still expect the Fed to at least take steps in a direction one way or another instilling a sense of direction down to the investors easing their tensions for the time being.
While all of these issues will lead to a turbulent 2018, a crash just seems out of the question to me. Long term investors shouldn't deviate from their strategy and let this scare them, while short term investors should be licking their chops for the upcoming year.
Reguardless of your strategy 2018 isn't the end of the stock market, or the downfall of the economy. Not just yet.