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A sharp drop in stock markets around the world does not show signs of release after the introduction of the US tariffs and scope, and many ask whether it is qualified as a “accident” on the stock market and what can it mean to them?
The word catastrophe has been used economically for decades and is usually reserved to fall more than 20% of the recent peak a day or for days.
October 19, 1987 – also known as Black Monday – The US stock market lost 23% of its cost in one day and other stock markets had similar falls.
It was definitely an accident.
In 1929, the US stock market lost more than 20% of the cost in two days – and 50% over three weeks. It was the famous Wall -Stritis, which introduced a great depression of the 1930s.
By comparison, the US stock market lost about 17% of its peak in February and has now decreased by 2% of where it was this time last year.
The UK FTSE index fell sharply, though not much.
This is partly because it closes earlier than New York, and so it often plays, catching up with everything that happens in the US the next morning.
However, these are the biggest and fastest decline we saw in the world markets, as in early 2020 they were covered with panic Covid-19 in early 2020.
A 20% decline is considered a “bear market” – a market description that seems more likely to decline than to go up. We are now very close to this description.
While many people have direct stocks and stocks, the impact on the stock markets of most people goes through their retirement plans. There are two types – certain payments schemes that guarantee fixed retirement income, and a determined contribution when your pension pot rises and falls to financial markets.
This may seem that plans with a certain contribution are very vulnerable to this sale – but not all your deposits go to the stock. Most of the money goes to safer investments such as government bonds. They usually increase in price when stock markets fall because they are considered as “safe shelter” as well as other assets such as gold.
This is exactly what happened here.
Public bonds have grown by price, and this can offset part or all drop stocks depending on how your retirement savings are allocated.
The closer to retirement, the higher the percentage of your retirement pot will probably be invested in the bonds – because the less you will be.
In decades after the Wall -Stritis, there were many similar falls, but in the long run, the shares were good investments – and retirement savings – a long -term game.
This matters. The cost of the company’s action is an indicator of how profitable these companies are expected to be in the future. The lowering market – it indicates that most people believe that most companies are likely to see their profits.
The markets believe that US President Donald Trump’s tariff bomb is expected to increase prices, reduce demand and reduce profits, making companies less valuable and more inclined to reduce investments and jobs.
Thus, a real warning sign is not the value of your pension, but about the health of the economy in which we live and work.
Sometimes, as often, it falls so, often announces an economic downturn. This is more concerned than the value of your pension that has seen and will see such volatility over the years.
But this does not mean that this is not a very big moment for the world economy.
