In the end of November the stock market loss about 1000 points in a single day. Seeing all of your stocks in red can be very overwhelming and your natural instincts would want you to sell out of your market positions and save the remaining money.
The market has lost almost 1600 points in the last couple of days. Yesterday new regulations were announced that Germany would go into a second lockdown starting on November 2nd and things start to look gloomy all over again.
What is causing the market to go down?
There are many reasons to that but all of those can be boiled down into two.
The first being the record number of cases being recorded all over the world. Germany just registered 14964 cases yesterday being the highest number of cases ever recorded. The cases in USA are also the highest ever recorded in a day being 81457. These cases are causing instability in the minds of many investor who just want to have as much cash available as possible
The second reason being the US elections. Historically the stock market has been very volatile in Election years more specifically near the month of October and November . If there is a new president, no one knows their policies and whether those policies have a negative effect on the stock market or not.
Donald Trump has mentioned multiple times that he will not take a US into another lockdown, however, Joe Biden has said that he would listen to the experts. And the experts would most likely be in the opinion of a second lockdown. If there is a second lockdown in the US, this will effect the stock market and we could see a similar crash to the one in March.
So is a bigger crash coming?
Well no one knows. However one thing needs to be kept in mind and that is to buy low and sell high.
As a beginner in the stock market, don’t invest in single stocks instead just buy ETFs so that your risk is mitigated.
Another thing is to keep dollar averaging into the market even if the market is low. Keep investing consistently so that in the long term you see the effect of compounding and don’t miss out in the market gains in the future.
*None of this is meant to be considered as investment advice, as I am not a financial expert and am only sharing my experience with stock investing. The article and video are accurate as of the posting date but may not be accurate in the future.
