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Stocks Plunge: What does it mean?

What does it mean when the stock market falls, then falls again? The market falls when there are sell-offs of stock. “'When you get this kind of sell-off, it kind of feeds on itself,' said Michael P. Ryan, chief investment officer for the Americas at UBS Wealth Management."

The changeover at the Fed (Janet Yellin just left), as well as the recent drop in Bitcoin may have created a "feeling" of pending value decline that was reflected in the market. It also might be the fact that it is the end of the first year of the President's term, a time for reassessment.

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It is a curious time in terms of economic prognostication. "The economy today is in tricky territory from a markets perspective. Investors have been excited about the prospects of the tax cuts, but they are also fretting that the government may be spending too much to pay for them.

Economists often advise governments to run large deficits during recessions to stimulate growth. But the United States economy is already solid." In other words, things are confusing. 


Source: "Dow Jones and S. & P. slide again, Dropping by more than 4%," by Matt Philips, New York Times, February 5, 2014. Quotes above are from this article. 

Follow up

  • What is the standard advice given to investors regarding dealing with stock plunges? Does this advice apply to you? Explain.
  • Read the linked article. In your own words, describe the reasons given for this stock correction vis a vis the global economy.