almost 4 years ago • 2 mins
Stocks are tanking: the US market has dropped almost 19% in just 19 days. But while many investors predict imminent recessions in America and Europe, some think things could quickly bounce back – and they’re sticking to their stocks 💪
The economic impact of the coronavirus will be significant, especially if other countries follow Italy in placing regions on lockdown. It may, however, also prove to be relatively short-lived.
Central banks have already leaped into action, and more moves may follow. The European Central Bank appears certain to follow its US counterpart in cutting interest rates this week, with the only question being by how much. What’s more, the sort of “fiscal stimulus” that was so divisive just a few months back – think government spending hikes – now looks increasingly popular.
The stock market correction, meanwhile – now approaching “bear market” territory – was perhaps overdue after a 30-month streak. And while further central bank intervention may take time to impact economic growth, stock investors have much quicker reactions. The selloff could, therefore, be nearing the bottom… 😬
The full impact of a slowdown on company earnings and access to credit remains unclear, as does the risk that central banks overreact now and are left looking like Mother Hubbard.
But it’s not all doom and gloom. Cuts to interest rates may put more money in mortgage-paying homeowners’ pockets – and for level-headed Finimizers who know investing is a long-term game, temporary stock price falls may offer a buying opportunity. After all, those following a dollar-cost averaging approach are currently picking up US stocks for 19% less than they were three weeks ago 🤩
Still, in turbulent times it's usually a good idea to steer clear of unnecessary risks. Cryptocurrencies have had an even worse few days than stocks, with bitcoin and the gang dropping more than 15% after scammers reportedly flooded the market with $100 million worth of ill-gotten crypto gains…
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