Stock FAQs

why is the stock market doing bad

by Dr. Clement Cummings IV Published 3 years ago Updated 2 years ago
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The stock market is down today. This can be attributed to various reasons, including global economic conditions, interest rates, and company performance. However, there are also opportunities in times like these. The Dow Jones Industrial Average ETF (NYSE

NYSE

The New York Stock Exchange is an American stock exchange located at 11 Wall Street, Lower Manhattan, New York City, New York. It is by far the world's largest stock exchange by market capitalization of its listed companies at US$30.1 trillion as of February 2018. The average daily tra…

: DIA) has fallen by over 6.5% in the past few weeks!

Full Answer

What to do if your stocks are all falling?

Jan 24, 2022 · There are several factors impacting the stock market right now, including the Omicron variant of COVID-19 slowing economic growth and …

What does a strong stock market depend on?

Aug 19, 2021 · This is because when stocks fall from recent highs, they’re trading at a discount and will likely rebound at some point, which sets investors up for larger returns. Continuing to put money in the...

Will stocks keep going up?

Jul 16, 2021 · And looking at the bigger picture, it appears many of the factors driving the stock market higher are still in place. Interest rates remain …

Will stock keep going up?

Feb 13, 2022 · Coronavirus The Motley Fool’s live guide on what investors should do during the stock market crash and the COVID-19 pandemic. For members of The Motley Fool’s investing services, you can ...

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Volatility is common

First, accept market volatility — which is relatively common — as a normal part of the process of investing and the best way to outrun inflation, said certified financial planner Brad Lineberger, president of Carlsbad, California-based Seaside Wealth Management, which manages about $165 million in assets.

Make a plan and stick to it

Sticking with your overall plan is generally the best thing you can do through a market slump, instead of panicking and selling too soon.

Have an emergency fund

Of course, even if you know that stock market volatility can benefit you in the long-run, financial advisors still recommend having a cash emergency fund on hand so that you can make it through a market meltdown without selling.

3 reasons investors are shrugging off the bad news

John has found investing to be more interesting and profitable than collectible trading card games. He seeks growth and value stocks in the U.S., in Germany, and beyond!

What's past is past

While news of mass unemployment and economic recession is both serious and upsetting, it's not really unexpected.

They've got it under control

Investors have had another good reason not to panic-sell over the past couple of weeks: the government's response to the economic crisis has thus far been both swift and aggressive.

FOMO

Legendary investor Warren Buffett counseled to "be fearful when others are greedy, and ... be greedy only when others are fearful," but that's a lot easier said than done. That's in part because FOMO -- Fear Of Missing Out -- is a powerful psychological phenomenon, especially for investors.

Who's right

Heck, if I knew where the market was headed, I'd be sitting on a throne of money on my own private island instead of writing financial analysis. But here's what I do know:

What is stock price based on?

“Stock prices are based on an expectation of future profits ,” says Ben Reeves, chief investment officer at Wealthsimple. “If you’re buying a piece of a company, you’re thinking about what it might turn into, and how much money it will make in the future — not just how well it’s doing right now. For example, people bought Google shares for a long time before it made any money. They weren’t buying what Google was at that moment in time, they were buying what they thought it would become. And they were greatly rewarded for it.”

Is there a shift in spending from IRL to virtual?

There’s been a big shift in spending from IRL to virtual, which is hurting some businesses but helping others. This has shifted spending towards technology companies, helping their profits and outlook, and away from products and services that need to be purchased in person, hurting their profits and outlook. This shift and slowdown is helping keep people alive in a pandemic, but also creates winners and losers. And more of the winners — like big tech companies — are represented in the stock market, while the losers — barbers, your local bistro — are not. However, it’s also worth noting that the publicly-traded companies that have been hurt by this shift in spending have really suffered (for example, Hertz went bankrupt).

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