Dow lost more than 500 Points: Did part 2 of the Corona Crash started?
The markets have fallen by more than 2 percent today. The Dow has lost over 500 points. Does this herald the second Corona Crash?
The honest and disappointing answer is I don’t know. Nobody does. Many claim to know the answer, but tomorrow everything could look very different.
The stock market and the economy are separate for the moment. The economy is mostly down. Millions worldwide have lost their jobs. This is particularly evident in the United States. Companies are on the brink of ruin. On the other hand, the stock market has skyrocketed in recent weeks. Some stocks reached all time highs.
Stocks seldom reflect the current situation, pricing in future developments. Thus, the current rally can probably be explained by the hope of a rapid economic recovery. However, many familiar faces warned against this rise. Stocks are too high, they say, and warn of a second crash. Only time will tell.
One thing is clear: in the long term, the stock market is going up. Those who hold out will be rewarded. Warren Buffett recently said in a CNBC interview that he has bought shares every single year since he was 11 years old. In the last 78 years, there have been wars, major crises, several stock market crashes, unpredictable things of all kinds — and the stock market has climbed upwards.
Corrections and crashes offer good buying opportunities to buy shares at a reasonable price.
For me personally: I didn’t put all my cash into stocks during the “first corona crash”. Meaning: If the shares fall again, I will gladly buy more. Apple, Amazon, Tesla, Wynn, Hilton and more.