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There is no sign of a sharp decline in global stock markets that many people ask if this qualifies as a stock market “collapse” after the U.S. imposes approval and waste tariffs, what might that mean for them?
The term collapse has been rarely used for decades, usually retaining a drop of more than 20% from a day’s peak or a few days’ course.
On October 19, 1987 (also known as Black Monday), U.S. stocks lost 23% of their value in one day, while other stocks experienced similar declines.
That was definitely a collapse.
In 1929, the U.S. stock market lost more than 20% of its value in two days and 50% in three weeks. It was the famous Wall Street crash that seduced the Great Depression of the 1930s.
By comparison, U.S. stocks lost 17% of their value from their peak in February, now down 2% from this time last year.
Although the UK FTSE index is not big.
This is partly because it’s more important than New York, so it often catches up with everything that happened in the United States the next morning.
Still, these are the biggest and fastest declines we have seen in the world market as they were attracted by the Covid-19 panic in early 2020.
A 20% decline in peak value is considered a “bear market” – a description of a market that seems to be more likely to decline than the rise. We are now very close to the description.
Although many people own stocks and stocks directly, most suffer from the stock market through their pension plans. There are two types – a defined benefit plan that guarantees a fixed pension income and defines your pension pot as rising and falling on the financial market.
It sounds like the definition of a contribution plan is very susceptible to this sell-out, but not all your donations belong to stock. Most of the funds are used for safer investments such as government bonds. When the stock market falls, these values tend to increase because they are seen as “safe havens” as well as other assets (such as gold).
That’s exactly what’s going on here.
The value of government bonds increases, which can offset some or all of the declines in the stock, depending on how you save your pension.
The closer you are to retirement, the higher the percentage you are to your pension pot, the likely you will invest in bonds – so the less impact you have.
There have been a lot of these falls in the decades since Wall Street collapsed, but in the long run, stocks proved to be a good investment – pension savings are a long-term game.
Very important. The stock price of a company is a measure of the profitable future profitability of these companies. A plunge market shows that most people think most companies may see their profits drop.
The market believes that the tariff bombshell of US President Donald Trump is expected to raise prices, reduce demand and reduce profits, reduce companies’ value and tend to cut investment and jobs.
So the real warning sign here is not about the value of your pension, but about the value of the economic health of our lives and work.
Sometimes such a fall even indicates a recession. This is more worrying than the value of your pension, which has seen and seen such volatility over the years.
But that doesn’t mean it’s not a big moment for the world economy.
