decline of stock markets both in America and the world
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Newbie here, I am new to investing only made around 2% so far of what I invested in SP500 from September
Everywhere I read and a lot of people just say to stick with the SP500 as it's the safest
But I noticed that it's between 2021 and 2023 the index was only going down, for a long term investor this probably doesn't matter that much
But for someone who is looking to gain some extra money in a short time this could be a bit risky
So my questions are; What mainly influenced this drop? Is investing not a game for the weak and just stick to other ways of generating money? And finally did the drop in the stock market influenced the prices (purchasing power index) in general?
It’s easy to forget how short the market’s memory is.
Still remember the last few months of 2022. The S&P 500 was down nearly 25%, the Nasdaq had crashed over 35%, and inflation was out of control. The Fed was hiking rates aggressively, and it felt like a deep recession was inevitable.
Goldman Sachs or JP Morgan (don't remember which) predicted the S&P 500 would go all the way to 3,000. Michael Burry suggested an even bigger collapse taking S&P500 back to 1800. Most investors were convinced this was just the beginning of more pain. Even then people talked about stagflation and going into the lost decade.
Meta, in particular, was the poster child of despair. Down 75%, from $380 to $88. People genuinely thought it would never recover. The ad market was dying. Reels weren’t making money. Zuckerberg was "burning billions" on the metaverse. Investors wanted him to shut it all down.
It wasn’t just Meta. Amazon reported its first unprofitable year after a long time. Google’s ad revenue shrank. Microsoft’s growth slowed. Tesla was down to $113 at its lowest. Institutions were slashing price targets left and right. Investors were selling at the lows, convinced things would only get worse.
And then... the market did what it always does. Slowly, things started improving. Companies adapted. Earnings stabilized. The panic faded. By mid-2023, inflation was cooling. The Fed hinted at pausing rate hikes.
Meta posted a solid earnings report. Then came $40 billion in stock buybacks. The stock doubled. Then doubled again. Amazon recovered. Nvidia went on a historic run. The Nasdaq had its best year in two decades in 2023. By early 2024, Meta, Nvidia, and Microsoft were hitting all-time highs to reach even higher by end of 2024. Two years of record gains.
When markets are crashing, it feels like they’ll never go up again. When they’re at all-time highs, it feels like they’ll never go down. Neither is true.
So investors, it's going to be fine. Just be calm and hold tight. And if you can, keep buying.
My understanding is that the dip was caused primarily by the fed's shift in monetary policy, the war in Ukraine, and lingering supply chain disruptions from the pandemic.
My mother insists the cause was Biden's decision to shut down the Keystone pipeline. I am hardly economically literate, but this seems to contradict what I take to be my most basic economic knowledge. I brushed her off, but she felt so strongly that I feel like I need a sanity check. Is there any credence to what she said? Thanks in advance.
