Investors face reckoning as stock market has worst week since beginning of pandemic

[brooklynite]

Source: Washington Post

Americans used to seeing their retirement accounts and other investments zoom ever higher suffered a reckoning this week, as markets endured their worst week since the start of the coronavirus pandemic.

In an orderly but persistent plunge, nearly all sectors of the stock market sold off. The Dow Jones industrial average lost nearly 1,400 points, or 3.9 percent, on the week, while the broad-based S&P 500 fell 5.1 percent since Tuesday.

Technology companies from Apple to Netflix were hit hardest, and the tech heavy Nasdaq index fell 6.2 percent on the week. Speculative bets on cryptocurrency got hammered.

The biggest drive of the plunge was growing concerns that persistently high inflation will force the Federal Reserve, the U.S. central bank, to aggressively raise interest rates this year. Sharply rising prices on things from used cars to meat to gas has quickly become a dominant concern among Americans. Higher interest rates can cool price increases but also limit economic activity, which often hit stocks, particularly highflying companies, hard.

Read more: https://www.washingtonpost.com/business/2022/01/21/stock-market-selloff-2022/

[Botany]

1. And when certain stock prices drop low enough "the smart money" will come back into the market ...

... and buy up what they see as bargains. Except for that crypto crap which I just don't get.

[ashredux]

4. Crypto is the new "Tulip Bulb"...

[Botany]

7. I talked about it with a very conservative investment banker and his thoughts on crypto is that ...

... it is like day trading and sooner or later most of the investors will lose everything
because there is nothing there.

Except for the MAGA folk who want to invest in Steve Bannon's "Crypto Bitcoin" and i
say go for it!

[Alexander Of Assyria]

12. The gambling rush of second by second crashes and soaring gains is bitcoins real value.

[louis-t]

20. Like they did when Glenn Beck was selling gold at $1,900.

And it fell to $1,100.

[question everything]

2. Was bound to happen. Wish it happened last month

to lower my RMD..

[Rebl2]

3. What gets

me people know interest rates were going to have to go back up eventually. They probably should have gone up when tfg was in office.

[bucolic_frolic]

5. Periodic up and down periods over the course of its history

With interest rates below 2-3% for much of the last 13 years, with Greenspan's "extraordinary, extraordinary, extraordinary" cuts after 2001, we have achieved overcapacity by robbing the future. Only supply chain issues from covid keep inflation going at this moment in time.

Count me in the camp inflation will be temporary, maybe 2-3 years even, then plummet taking the rest of the economy with it.

Inflation can bring on recession, note 1973-75. The Nifty Fifty sounds an awful lot like today's 'safe' tech stocks.

[anti stupid]

6. interesting

In a country with a widening wealth gap the top 10% own 70% of stocks. So, the direct impact on 90% of the population is less. Of course, the wealthier people will squeal the most and the media megaphone will amplify. It is more dangerous for the stock market when wealth is controlled by fewer and fewer people. Seems to me that a society with a more even distribution of wealth, would have a more stable stock environment. But of course, because of greed and the Republican party, we won't get there.

[Farmer-Rick]

8. The mostly filthy rich are worried inflation may cause

Their captured federal reserve boards to raise the interest they charge the filthy rich banks and corporations.

The inflation caused by the filthy rich who have control over almost all the pricing.

Here's an idea. Why don't the filthy rich lower their prices?

Just a thought. The filthy rich act as if they are helpless little pawns. They are responsible for every step of this mess.

[brooklynite]

29. If people can force salaries up by moving to new jobs...

...they can force prices down by not buying things.

[Farmer-Rick]

30. Not really

Somethings you must have: water, food, habitable shelter, medical care and some kind of clothing. People will promise to pay whatever you want, and commit crimes if they seriously lack those things or need them for their children. That's why our medical system costs us so much. That's why Corporations want to own all those things. They know you will pay anything if you are hurting for any of those things because a serious lack of any of them will kill you or your children.

[Alexander Of Assyria]

9. And the house of debt comes tumbling down, the luxury of being a world currency be damned.

Even more need to tax the rich and their hidden hordes to pay back what they sucked from the taxpayers.

[E. Normus]

10. It doesn't hurt everyone

in the market, at least not yet. If you are living off of your investments right now, if you are retired for instance, selling what you need each month for expenses, then you are selling low. Ouch. If however, your time horizon is such that you do not plan to sell but only to keep investing, then you might see shares as being "on sale". Of course, you would need to believe that the market will rebound at some point. It is not about current value, it's about accumulating shares. Value matters when you need or have to sell.

[JohnSJ]

14. There are also many who live off the dividends and interest that were bought many years ago, and

while a significant drop would cause the "paper" value of their investments to drop, if they have solid companies, those dividends will most likely will still be coming in.

In addition, those who bought years ago and held, even with a significant drop, they most likely will still be doing quite well on paper, since the values have risen so much.

The things that could cause a complete loss of everything, would be something like the fall of the government or a nuclear war, and in a situation like that everyone would be affected

[Farmer-Rick]

31. That's what happened in the Great Depression

If you are living off of your investments right now, if you are retired for instance, selling what you need each month for expenses, then you are selling low. Ouch."

Everyone was in the market. They thought the market would always be there to fund their life. Of course it didn't help when the banks refused to pay out what customers thought they had saved in the banks. So it was a double whammy, like having a pandemic and an economic crash.

[Shermann]

11. The Dow has gone sideways over the last 9 months

Hopefully after a breather it will start climbing up again

[Old Crank]

13. A large portion of the market

Is owned by the very well off. 70% owned by the top 10% of the country. A certain amount is owned by foreigners.
We have many more workers in the stock market than before thanks to 401k and 403b, as well as IRA accounts. This is all well and good if you are in a position to weather any 'corrections' in the market and don't have to take funds out while it is dropping or after any drop in value.
The big issue is that so many regular people have pension dollars tied up in the market.
Companies worked hard to kill off defined benefit plans to save money. Now investment choices and management have been handed to regular people who don't have the financial savvy, or time and energy, to do the work required to deal with complex economic choices.
This saved companies a lot of money but it puts peoples retirement at extreme risk.

[JohnSJ]

17. About 53% of all US families are invested in some form of the stock market, whether it is through

their retirement plans at work or individually.

[Delphinus]

26. Yep.

And I was trying to grow it ... but may just try to find a safe place that can give some dividends to help supplement things that go wrong or need fixed. Quite scary at times.

[JohnSJ]

27. I agree

[DENVERPOPS]

32. Bingo OC nc

[paleotn]

15. Oh...my....god!

The Fed might raise the discount rate! The sky...it's falling!!! Aahhhhhh!!! That may bring some sanity to tech stocks? Just a thought. Time for some dip buying me thinks.

[JohnSJ]

18. Yes, it is nuts this "sky is falling" scenario. Even if they do 5 interest rate increases this year

interest rates will still be at historic lows.

[NoMoreRepugs]

22. Thank you. The Clinton years were incredible for equity markets

AND the economy as a whole and the 10 year was between 4-6%. So now 2-3% is going to stop the presses???

Puh-lezzz.

[former9thward]

23. The dot com crash occurred when Clinton was president.

We may be seeing a similar event happening with tech stocks.

[NoMoreRepugs]

33. Don't remember it having anything to do with interest rates.

[paleotn]

25. Exactly!

[BlueWavePsych]

16. ah ah ah SELL ...

[Old Crank]

19. The Fed increasing rates

Has been discussed for months. This is no surprise. Why the sudden panic? All the serious conservative economists have been begging for this type of action.

[Tomconroy]

21. "The end of the world doesn't happen very often." Brian Rogers, T. Rowe Price.

[E. Normus]

24. of course

the right wing nuts who want to "own the Libs" will blame this on Biden and say it shows how lousy the economy is doing. Of course, never realizing that the equities market is a very poor indicator of the overall economy.

[muriel_volestrangler]

28. It's about the same drop as at the end of Oct 2020

The S&P 500 dropped from 3465.39 on Oct 23rd to 3269.96 on Oct 30th - 5.6% down. And then recovered that, and more, in the next week. It's still about 65% up over the past 3 years, which is a hell of a lot considering there's been a 2 year pandemic during that.

[Crowman2009]

34. Moving the mutual funds in my 401(k) to a stable money market fund for now.

Luckily I saved quite a bit and got into "I"series savings bonds, which are at 7.12% interest right now.