There are many reasons that stocks are down this year. Look what Russia did! The Federal Reserve raising interest rates. And finally, there is the issue of corporate debt. All of these factors have contributed to a decline in stock prices this year. The market has been down this entire year after a sweet two years of juicy returns.
My beautiful tech stocks are also getting hammered! I like QQQ ETF (It’s 100 of the best tech companies money can buy), but it is down more than 20% this year. The poor guys who trade TQQQ 3x the QQQ are down around 50%. Even cryptocurrencies are down! Check out why here! Come on Bitcoin and Dogecoin are two of my favorites. Everything is down! I find this ironic because when I was hoping for stocks to pull back in 2020 (Besides the covid crash) and 2021 they went up every day. What gives!
Russia is a wild card and Geopolitical nightmare
Russia has attacked Ukraine! Russia is one of the many culprits that has caused stocks to tank. Moscow’s attack on Ukraine has thrown a wrench into the works of European security. Europe, which is still recovering from recent wars and conflicts in places like Afghanistan or Iraq is now facing another potential war with Russia right next door- this time outrightly funded by their own countrymen who are volunteers willing to fight against democracy as they see it just because someone said so out loud on TV once too often! These are some of the reasons stocks are down!
It all began last month when President Putin signed away any chance at peace between his authoritarian government officials and democratic protesters active throughout Eastern Europe during former times – throwing everybody involved into disarray while also provoking harsh criticism directed not only towards him but even more importantly those close associates whose loyalty he relies heavily upon such. This has been a monkey wrench thrown at our market!
Interest rates are about to go boom higher
The federal reserve is raising interest rates and why is this bad for stocks? When rates go up, stocks usually go down. The reason is that stocks are competing for investment dollars with bonds. When rates go up, the demand for stocks falls and stock prices drop.
Why are rates going up? The economy is doing well. The unemployment rate is low, and wages are rising. That means inflation could be a problem. The Fed is worried about inflation, so it is raising rates to cool off the economy.
The increase in rates has also caused the dollar to strengthen. That makes our exports more expensive and hurts our economy. The strong dollar has also caused stocks to decline around the world. This has definitely contributed to stocks being down.
Debt is a big issue for stocks being down
All of this debt is a big issue for stocks. Companies have been borrowing money to buy back shares and pay dividends. But now they are starting to have trouble making payments. The amount of corporate debt has doubled in the last ten years. That makes the stock market riskier.
When a company can’t pay its debt, it usually has to sell assets or go bankrupt. That can cause the stock price to drop. The market is worried that too many companies will have trouble paying their debt. That could lead to a stock market crash.
Not so good cooperate earnings are causing stocks to drop
Finally, there is the issue of corporate debt. Companies have been borrowing money at a record pace over the past few years, and this has caused stocks to be down. This is because when companies borrow money, they are essentially selling more of their future earnings. And if interest rates rise, as they have been recently, then these companies will have to pay more in interest payments. This will reduce their profits, and this will cause stocks to decline.
With the recent earnings season being less than robust, investors remain anxious. But it’s not all bad news–about one-fifth (20%)of companies in the S&P 500 have filed their fourth-quarter reports and 82% meet expectations which are up from last year when only 61%. However, this still isn’t enough to ease anxieties since stock valuations are forward-looking according to fund managers who say guidance by firms will be lower than anticipated with just Micron Technology beating estimates while raising its own outlook. It seems everyday stocks are down!
Final Thoughts
So there are many reasons that stocks are down this year. Russia attacking Ukrain, the Federal Reserve raising interest rates, and the issue of corporate debt have all contributed to a decline in stock prices. The market has been down this entire year, and it doesn’t look like it will be getting better anytime soon. All of these factors have contributed to a decline in stock prices this year. The market has been down this entire year after a sweet two years of incredible returns. So, if you’re wondering why stocks are down so much, now you know! I am personally buying the dip. Two big tech giants are splitting soon GOOGL and AMZN. These two companies are starting to look really attractive.
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Disclaimer: This article is for information purposes and should not be considered professional investment advice. It contains some forward-looking statements that should not be taken as indicators of future performance. Every investor has a different risk profile and goals. All investments have risks. Always do your own research or hire an expert before investing and trading in the stock market.
