As a concerned citizen, you’ve noticed the US stock market index shows a fairly steady decline since January 2022. Most investors have set up their life savings in a retirement fund (or two) that rely heavily on the success of the stock market. While regular and ongoing corrections and crashes based on global equity, capital, and commodity markets are actually normal, this year is different! The S&P 500 in 2022 is currently down by 20-30%. Analysts also predict a greater stock market plunge in 2023. There is typically a stock market crash about every 15 years, and this year seems to reflect the next one.
Impacts of the Stock Market Crash
The definition of a typical stock market crash is quite simple according to Investopedia: it is a rapid and often unanticipated drop in stock prices. A stock market crash is the correction or realignment in the value of stocks. A correction is based on national stock indices that see certain stocks as overvalued, which in turns leads to a sell-off. This year, investor fear and a lack of investor confidence are both playing a huge role in the continuing stock market selloff. Examples of the current psychological impact include:
Investors are panicking as the stock market crashes and their reactions are leading to devastating financial mistakes.
- Negative but true news is being spread by the press and social media outlets are leaving investors in a position where the facts are hard to find. It is difficult to assess strategic stock reporting.
- Herd mentality has set in as investors move their money—not to an advantage. A simple diversification may be the best choice.
When people understand the stock market crash, better decisions are made in terms of the best long-term financial strategy.
Why Is The Stock Market Crashing
The stock market is crashing in 2022 based on a number of conditions. The main condition today includes a lack of institutional regulation and risk management as well as the theories about the lowered value of money. The 2020-2021 pandemic and associated stimulus payouts kicked off the current crash, but the following are key contributors in today’s stock market decline:
- The Fed’s raising of interest rates
- State of inflation / outrageous cost of goods and services including fuel
- The printing of money
- A multi-trillion dollar US balance sheet
- Fluctuating property and equity bubbles (due in part to stimulus money)
Today’s rising interest rates and inflation are the key contributors to our serious stock market decline. Also consider 12+ years of low interest rates that in turn made yields on government bonds nearly zero. Extra capital was invested in equities and property resulting in housing bubbles across the nation. Given all of these risk factors, which are undoubtedly real, a stock market crash is upon us.
Foreign Entities Impacting our Markets and Our Money
Along with the serious conditions surrounding today’s stock market crash, there are also a variety of foreign threats and theories regarding our US money. The Great Reset as put out by the World Economic Forum is a perfect example of world and financial dominance. There are also many threats to the US by other countries, and any potential conflicts will certainly impact the stock market and our currency. It’s a great time for investors to get informed and take action.
What Should Investors Do In A Stock Market Crash
Historically, when the stock market is crashing, we see gains in gold. The reason is that gold, much like other commodities such as oil, fuel, copper, tin an even coffee, increase in price and therefore increase in investment value. In times of decreasing stock values investors revisit their financial portfolio mix. When personal investments are going down in value, it’s a good time to seek additional assets that are not impacted by the risks above. These assets are often precious metals that are not impacted by devaluation. Risky stock investments may be replaced or at least supplemented with safe, less volatile alternatives for a more diversified portfolio.
During a period of crisis, investors find the perfect window in which to look at risk tolerance. It’s simple to measure the amount of money lost in a day or a month, which prompts investors to re-evaluate portfolios. Contact Reagan Gold Group (RGG) today to review your financial portfolio while the markets continue to be down. It’s the perfect time for the right advice to protect your assets and diversify your financial portfolio.