Home » Articles » Why Is the Stock Market Tanking Today?

Why Is the Stock Market Tanking Today?

In essence, the stock market is extremely volatile. It can get affected by even the trifling issues, which, in turn, might inflict damage on the investments as well. However, the current situation of the stock market has not really happened due to a trivial event. Instead, it seems like the aftermath of the global COVID-19 pandemic is still ongoing.

Due to the sudden emergence of the pandemic, most investors stopped investing in the stock market. It, sequentially, caused revenue production to eventually go down. Moreover, the political trifling, the impending election, and rigorous deficiency of stimulus can potentially affect the market even more. But, is the anticipation of stock market tanking viable at all?

Well, if you take a look at the records, then you might understand the situation of the same. You should firstly learn how to invest 1000 pounds uk. For example, The Dow is currently sitting on around 26,624.53 points, which is almost 838.66 points lower than their prior standing. On the other hand, the S&P 500 is also down by around 3%. And, most experts are considering that the point structure might go even lower.

What are the Causes of Stock Market Tanking?

In general, the occurrence of the COVID-19 seems to be responsible for the current situation of the stock market. However, that’s not the only issue, which is affecting the same. There are a few other factors that are driving such a low standard as well. So, let’s take a look at them. 

The Growth Conflict in China

Due to the abrupt materialization of the COVID-19 pandemic, the economical growth of the whole world has slowed down. And, China is one of them. However, the possible slowdown of the Chinese financial strata is nothing new at all. The experts have been voicing their opinion about the same issue since 2017.

Nonetheless, there is a hitch. Unlike the USA, China’s capitalist-communist hybrid persona deeply entangled with the Chinese Government. Thus, the country itself cannot suffer a massive financial loss due to any situation, like the USA. However, the country can mismanage the availability of resources and create a lot of certain components than required.

This, in turn, can slow down the GDP of the nation and almost prompt it to crawl through the ground. And, the same thing has happened during the Pandemic as well. The outer world has stopped collaborating with various Chinese companies.

Let’s consider Huawei as an example here. In 2020, the USA government had blacklisted Huawei from their country. Thus, the company will not be able to operate in the USA anymore. It has affected the revenue generation of the organization and its stockholders as well.

Conflicts between Countries

Due to the COVID-19 pandemic, the conflicts between various countries have increased even more. For instance, there are many nations in the whole world, which still firmly believe that China was the reason behind such a wide-scale endemic.

Thus, many of them have boycotted Chinese products and stopped collaborating with China-aided companies too. Due to the influence of Chinese components, the stock markets of the nation and, the whole world, have taken a huge hit.

The Political Debacle in the USA

After the dethroning of the former USA president, Donald Trump, the political circumstance of the country became quite volatile. Owing to this issue, the stock market of the whole world was affected to some extent. According to several marketing strategists and specialists, the upcoming election procedure in the nation will unbalance the situation even more.

How to Save the Investment Portfolio during Such Calamity?

So, if you are a regular in the stock market, then the whole state of affairs is a piece of bad news for you. And, this issue might unsettle the planning of a newbie investor as well. However, there is no need to panic at all. Also, you should not sit at your home, hoping for some good news during this period as well.

Instead, we would ask you to formulate a bear market stratagem. It will help you to protect your investment portfolio from various outcomes and assist you in generating more money. Here, in this section, you are going to learn about two different steps to bolster your strategy and ensure your revenue production. Let’s get started!

Evaluate Your Risk Tolerance Properly

A sudden drop in stock market value can be quite unsettling for an investor, especially if he/she is new in this aspect. It can harm their confidence, portfolio, and the overall experience in this aspect. So, how are you going to tackle such a calamitous situation by yourself if something similar happens to you?

Well, you can always begin the procedure of redemption through the evaluation of risk tolerance. But, how will you do it? You can try to experiment in the market with the help of a stock emulator. With these platforms, you will get to manage around USD 1,00,000 of virtual money to experience the ebbs and flows of the stock market.

This way, it will be easier for you to find the periods when you should and should not invest. Hence, you can potentially steer clear of the risky endeavours in the market. Moreover, you may also assess your own risk tolerance properly.

Prepare for Your Losses

In order to be confident regarding the investment, you will need to grasp the core working procedure of a stock market. It will enable you to clarify the sudden downturns and help you to decide if you should buy more stocks or not.

However, as the stock market is extremely volatile, you would always have to be prepared for the worst. Furthermore, you will also have to place a strategy to hedge against potential losses. In this case, you can try to spread out your investments to different markets.

Conclusion

The current situation of the stock market is, indeed, calamitous. However, the condition will uplift pretty soon. So, if you have already invested in the market, then we would suggest you to hold on patiently for now. And, if you are thinking about making an investment, then it will probably be better for you to sit this one out. You can strategize during this period and pounce on the market when everything’s back to normal.