Last week the stock market performed the worst it has since Covid-19 began. This week the trend seems to be continuing.
Three principal factors are causing this shock in the market:
1. Risk Off: investors are cutting down risk
2. Interest rates: FED announced an increase on interest rates, which is lowering liquidity
3. Individual investors: Retail investors are diminishing their activities in the stock markets due to a return on daily activities and traditional investments.
From January to December 2021, its highest point, 100 principal tech companies on NASDAQ rose 30%, but during the past weeks, ⅔ of that increase vanished. Even 101–200 enterprises in NASDAQ have gone through an even worse process; they finished with a price even below their baseline.
Should we be worried?
Not yet. This process is normal. Overall, this is a good time to reduce risky investments. It is also a great time to take advantage of buying cheap equities for the long term.
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