Having money in a rapidly rising market, especially if it’s a lot of money, can make you feel rich. On the other edge of that sword, however, is the panic you feel when things start coming apart.
I’ve been investing in stocks for 40 years, and I don’t recall a time more volatile than what we’ve endured in the last year, and especially over the last couple of weeks.
Last February, the Dow Jones Industrial Average was at about 30,000 points. A few weeks later in mid-March 2020, it dipped below 19,000, a head-spinning decline of 37%. And since that time, it’s been on a tear: The Dow regained, then exceeded, 30,000, and it’s been mostly straight up, except for a few quick dips.
Until recently, that is. One day the market is up 500 points, the next down 700. It’s been a roller coaster, with some of the biggest bubble stocks, like Tesla, down 20% or more from their highs.
What’s going on? Well, if you listened to the podcast we recorded Jan. 28 — “Is the Stock Market in a Dangerous Bubble?” — you’d know exactly what’s happening. In that episode, I told you to watch for rising interest rates, because rising rates are often the pin that pops a stock bubble. And rising rates are what’s behind the recent market mayhem.
At the end of January, the rate on the 10-year Treasury bond was barely above 1%. Now it’s above 1.5%. Still low, but that’s a 50% move in a little more than a month.
I also told you in the same podcast that the stocks most vulnerable to market corrections would be the highest flyers, like Tesla and Big Tech stocks. That too was sound advice. As rates have risen recently, these are the stocks that have been hammered the most.
So, that’s where we are and where we’ve been. The question now is: Where are we going? That’s what we’re going to attempt to determine in this week’s “Money!” podcast.
Sit back, relax and listen to this week’s “Money!” podcast:
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Want more information? Here’s additional reading:
- Motley Fool: Investing in Value Stocks
- Nerdwallet: Growth vs. Value Investing
- Bloomberg: Tech Stocks Lose $1.6 Trillion in Worst Streak in Six Months
- Bloomberg: Crash Landing on Stock Heroes of Yesteryear Is Worst in a Decade
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- Take our The Only Retirement Guide You’ll Ever Need course
- Take our Money Made Simple course
I founded Money Talks News in 1991. I’m a CPA, and I have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.