Stock Markets may occasionally witness violent shocks, leading to a sudden and sharp fall in stock prices, in which investors may lose hundreds of billions of dollars.
The collapse of financial markets is intertwined with economic factors, psychological aspects and investors’ behavior on the stock exchange, spurring heated selling of stocks, leading stock markets to lose an important part of their market value within days.
Analysts advise when a sharp fall in stock markets
To promote awareness and investment culture among small investors, especially new investors, MarketWatch published three basic tips for analysts and experts to follow in the event of a sharp drop in stock markets:
1. No Panic
The strategic analyst at Invesco advised Christina Huber not to panic and be reckless with any decision, but to think carefully about the market environment and stick to the trading strategy initiated by the investor.
An analyst stressed that experts warn investors from time to time of any market shake-up and the need for caution and risk aversion while remembering that there are gains, losses and time frames where targets should be set, whether on the rise or fall.
2. Do not buy during landing
Morgan Stanley analyst Michael Wilson advised not to buy while the stock market is falling as its sharp decline is causing investor anxiety and this is pushing it towards further losses.
Wilson said the US stock market was under pressure recently from the monthly payroll report, which raised speculation of a Fed rate hike.
There is also concern among investors about financing Trump’s fiscal policy and doubts about infrastructure spending, Wilson said.
3. Problems in the past and the future
“The recent surge in US Treasuries has triggered a correction in the stock market,” said one senior portfolio manager at Nuveen Asset Management.
Bob Dole added that the recent rise in US Treasuries has had a negative impact on the stock market. This has pushed investors away from the equity market and turned them around investing in US bonds, which have seen better earnings.
Doll pointed out that the stock market has faced problems and pressures in the past, and of course will face other problems in the future.