GM 🥷
The U.S. stock market experienced sharp fluctuations last night, with the Nasdaq index plummeting 3.6%, marking the biggest single-day drop since October 2022. At the same time, gold and $BTC
Safe-haven assets such as ETFs and ETFs also experienced a pullback. The market panic index soared 22.5%. Market panic is intensifying, and a situation of more killing more may be forming.
Judging from the comments of domestic retail investors, they seem to be more optimistic than American investors, believing that this is just a technical adjustment and there is no need to panic. Some even choose to increase their positions against the trend, firmly believing that US stocks will always rise. However, the current correction of US stocks may not be short-lived. Even if you hold a bullish view, please do not rush to increase your positions for the time being, let alone buy more when the market falls near the historical high. At present, the Nasdaq index has only corrected 7% from its high, which is just the beginning.
Looking back at history, when the Federal Reserve entered the interest rate hike channel in 2022, the Nasdaq fell 33% throughout the year; in early 2020, due to the epidemic, the Nasdaq also fell back 32%.
Although the Nasdaq has hit new highs since 2023 amid rising interest rates, the market logic will reverse as the U.S. dollar is about to cut interest rates, and the decline may not be small. During the interest rate hike, funds flocked to large technology stocks such as M7 because the financing costs of small businesses were too high, while the performance of large technology stocks was more certain. However, a rate cut will lead to a reversal of logic, and the market will begin to interpret recession expectations. In addition, the uncertainty of the U.S. election and the policy attitude towards large technology companies are not good for the Nasdaq.
Many people are used to the continuous rise of the US stock market in the past five years and believe that the US stock market will only rise and not fall, but this view ignores the long-term volatility of the US stock market. If you delve into the history of the Dow Jones Index, you will find that from 1965 to 1981, the Dow Jones Index fluctuated between 600 and 1,000 points for a full 16 years, experiencing five major ups and downs. It was not until the Reagan administration introduced economic neoliberalism and implemented debt-driven development (i.e., large-scale monetary easing) that it broke through this range and began to rise again.
16 years, how many 16 years can there be in a lifetime? Today, the size of the U.S. national debt has reached 35 trillion U.S. dollars and is still growing. It can only keep breaking through the debt ceiling until it reaches 60 trillion U.S. dollars, which is twice its GDP. This is basically a foreseeable long-term future. Therefore, even if you are optimistic about U.S. stocks, please wait and see for the time being, and don't rush to buy more near the new high. Usually, such investors are often leeks who enter the market near the highest point, and they may suffer setbacks on both ends, whether in A-shares or U.S. stocks. Therefore, please keep a distance when covering your position, be prepared for a protracted war, and be kind to yourself.
Peace
