The higher closing in the stock market on Monday intrigues the bear market territory. Stocks open higher on Monday after the dramatic close. S&P 500 closed above the bear market with 18% down from January 2022 high. S&P slipped at 20.5%, after slightly rising in the Friday opening bell. It signifies that there is a potential in the bear market after the bleak pandemic.
Theoretically, a bear market is when the market has plummeted at 20% from a recent high. In the seventh week, the S&P 500 and Nasdaq are down. Plus, the Dow is also down for eight. This depicts the disappointing earnings from Target and Walmart, the major retailers. Consumers start to feel the impact of inflation. Practically, it is the sign of safe havens, but last week they plummeted. To sum up, no retailer is immune to the economic conditions due to the rise of interest rates, supply chain recovery, high fuel price, and war in Ukraine.
This volatility seems for an investor to sell everything and run for the hills. But it is not a suggested way. Volatility is normal, for long term investors, the condition won’t affect them in years, Capitulation is when investors lose money on investment due to selling when the market is low. Learning from history, the market will always find a way to recover.
Therefore, during the market downturn, it is important to question the reason for investing. Investment is for the long run. Therefore, it takes patience and determination. Thus, it is important to not panic and save energy to understand the condition. Founder of Personal Finance Club, Jeremy Schneider, said that investment is a game of decades not days. The process is buying and holding assets, paying dividends to go up in value over periods of time.
