Are you interested in why the market tanked?
Go ahead and scroll up… yup, those are some serious market losses! And to think, a week ago the Dow was prepared to break 27,000. But not so fast – and even Amazon stock fell by 6%. So, why do bad things happen to good people (like yourself)? Well, let us explore the oddity that is the stock market.
Interest rates are rising… and to put it simply – low interest is good for corporate profits. Also, when rates are low, investors have more incentive to buy stocks over bonds because stocks can earn a significantly better return. But now, interest rates are going back up, which is bad for stocks but good for other stuff.
The Fed can’t stop, won’t stop… raising rates. However, it is a good thing because rising interest is a sign of a strong economy – so strong that we can’t let it get too strong! So now, stocks are getting competition from bonds because bonds are producing returns that are worth a second look. The 10-year Treasury yield is at 3.24%, the highest its been in seven years. So what do you say – bonds anyone?