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5 Things You Better Know About The Stock Market Freefall

5 Things You Better Know About The Stock Market FreefallThe Dow Jones plunged Monday by 1,175 points and continued that slide Tuesday morning. Not surprisingly, many investors are confused by the freefall.

Here are five things you should know about the present panic on Wall Street:

1. The Dow Jones industrials suffered its worst one-day point drop ever on Monday. It even was down by 1,600 points at one point. This was actually worse than the memorable decline on Sept. 29, 2008, during the Great Economic Meltdown, CNBC reported. The market lost 777 points back then. Still, as a percentage of the market (4.6 percent), it was not a record.

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2. Interest rates might be to blame. Bond traders believe the sell-off, which began Friday, was triggered by speculation that the U.S. Federal Reserve is set to raise interest rates. The fear is that higher interest rates would lead to lower home sales and less new construction, which can trigger a downturn.

3. This might not be a correction. A correction would require the Dow to lose around 10 percent of its value, Vox pointed out. The Dow only lost 6.5 percent of its value on Monday. However, stock market strategist Steve Stovall told Vox that a 20 percent drop in the market is possible.

4. The real estate market might be worse than stocks right now. U.S. home sales fell sharply in December, the National Association of Realtors reported. Home sales fell by around 3.5 in the final month of 2017. The number of previously owned homes fell by 11.4 percent to 1.8 million, the lowest number since January 1999.

5. Advisors are telling people to sell their stocks. Bank of America Merrill Lynch analysts gave investors a “sell indicator” Friday, CNBC reported. The indicator means that the market is overheated and primed for a big fall.

The Bank of America Merrill Lynch Bull & Bear or sell indicator is one of the most accurate predictors of market activity, CNBC reported.

What do you think? Share your thoughts in the section below:

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4 comments

  1. I have seen a few ‘corrections’ in my time. A long time ago, I learned not to invest in a 401k plan. I took my planned contribution money and paid off my debt instead of investing. The best decision I ever made.

  2. I don’t know enough about the stock market to make an intelligent statement. I am, however, quite certain that the fractional banking system combined with fiat currency, is a recipe for disaster.

  3. Buy a stock that is going to go up. If it does not go up, don’t buy it.

  4. TheSouthernNationalist

    Investors got spooked and caused a massive sell off, but I’m buying!
    Hopefully the stocks I chose will go up and I can retire a wee bit earlier than I had planned.
    For those that want to gamble a bit, block chain technology is the way to go, its inexpensive at the moment so you can purchase quit a bit of it.
    I wish I had bought Amazon stock back years ago when it was only $2.00 per share, its worth $1325.00 per share now!

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