The New Year has meant a sign of troubling times for the stock market as a whole. Since December 15 the Dow has fallen over 9.3 percent. This type of drop in such a short period of time does not happen often leaving many investors panicking. The Dow was sitting at almost 18,000 points and now at today’s close is at 16,167.23 points.
A nine percent drop may not seem too substantial to the average person but if you had a retirement account with $250,000 in it and lost nine percent, like the Dow, you would have lost $22,500. This amount is more than the yearly salary of someone who works full time at $10 an hour before taxes.
The drop off in the economy has some people panicking and worrying about a crash that may soon come, and many investors are advising to get out of the market completely. The main reason that the U.S. market is struggling right now is due to the fact that the Chinese market has been in a downward spiral itself. When a major economic power like China has signs of trouble, it worries investors across the world also leading to negative signs for U.S. stocks and investments.
One of the worst things about an economic downturn is the almost self-fulfilling prophecy that occurs as well. When people believe that a crash is coming, they tend to sell their shares in order to save the losses but when a large volume of people all within a short period of time decide to sell, the market really takes a hit and this drives down prices even further. So whether a crash will occur or not remains to be seen but one thing is for certain, if we do begin to fall we and the rest of the world will fall hard.
