A lot of markets were down yesterday, Oil prices plunged by over 6% in under 36 hours; weakening commodity-backed currencies like the New Zealand Dollar, Canadian Dollar, and Australian Dollar.
At the open of the New York session, Stocks crashed recording one of their biggest losses since the recovery that we began to see earlier this year in March.
Leading Stock Indices Crash
The S&P500 index dropped by over 4% within 10 hours, Nasdaq100 (Tech Stocks) over 6.3% in 5 hours, the Dow Jones over 3%, and the FTSE100 slid further closing below August’s monthly low.
Could this be the beginning of the end, a sign of impending danger? I think so.
An article in the Financial Times quoting data from Oxford Economics noted that the five biggest US companies Apple, Amazon, Microsoft, Alphabet, and Facebook – have a combined value of almost $8tn, but were trading at an average of 44 times their expected earnings. This figure is close to the 50:1 price-to-earnings ratio which the five biggest stocks boasted at the dotcom bubble peak.
In simple language, this means history could be looking to repeat itself here. If you consume financial news, this summer you probably came across articles talking of the meteoric rise in the stock prices of giants like Amazon, Apple and Tesla.
Apple losses over $150bn in value
Perhaps stocks like these are now overvalued and overbought? Technical price and volume indicators suggest so. Yesterday’s losses concur; iPhone maker, Apple dropped 8% wiping more than $150 billion in value.
Even Tesla’s CEO has tweeted that he felt TSLA shares were overpriced and that was back in May when shares were trading at around $140, yesterday before the crash shares were trading at more than 3X this price!
In a previous article, I pointed out how there would likely be a second market crash before the end of 2020. If the next 5 days record more losses, it could suggest that this is the beginning of the end, the start of the second crash. I’m still on the lookout for this, many financial analysts are as well.
How you can take advantage of this
Perhaps you should factor this in as well and take necessary precautions to protect your wealth or also look to profit from this move by learning how to trade the financial markets through one of my programs.
Quick free pointers
if you’re a middle-class worker or family with no investments in stocks and shares, just make sure you’ve got some money saved up for a rainy season (not just a rainy day) because it’s coming.
If you own stocks, cut out heavy investments in Bluechip stocks and diversify your portfolio by looking at stocks that are likely to profit from a second market crash.
I’ll end this article with the famous ever-true words of the best investor of all time, Warren Buffet,
“Be fearful when others are greedy and greedy when others are fearful.”
Globally people are slightly more optimistic about the future than they were in March, market participants are getting greedy, at the same time news of new COVID cases is slowly starting to enter the news cycle with the US presidential election inching closer..