The 7 causes to explain the stock market crash

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If you are an investor, you are possibly afraid of what is happening these days in the stock markets around the world, with the collapse of the stock markets. Not in vain, Stock markets have depreciated since the beginning of the new year by an average of almost 20%. Too much ground lost in such a short time, allude many of those affected. Given this, it is not surprising that many small savers wonder if this trend will continue in 2015.

There are still many doubts about the origin of these abrupt movements in the markets. From analysts who argue that it is a mere correction movement, eso sí de gran profundidad, inclusive los que auguran que se trata de un cambio de tendencia en toda norma. Sea cual sea el caso, pocos minoristas están tomando posiciones en acciones en las circunstancias actuales, todo lo contrario: venden sus acciones rápidamente por miedo a una mayor depreciación. Y en todo caso, expectante por lo que pueda suceder en los próximos meses, o al menos en el más corto plazo.

Whatever the case, there is one thing very clear and worth noting, that the trigger for these large falls in stock markets around the world it is not due to a single cause. Pero al contrario, a muchos y de diversa índole, como se verá en este post. Y que disponen el peor escenario viable en una nueva recesión a escala mundial. Lo cierto es que está causando que los pequeños inversores españoles pierdan mucho dinero, más de lo imaginable.

Strong shocks from bags

To check the depth of the falls in the stock market, it is enough to remember that stocks, such as, for example, Banco Santander or Arcelor are very close to 3 euros. Something abnormal must be happening for them to operate at these low levels. But also in the rest: BBVA, Repsol, Telefónica, ACS and so on until reaching an endless list. From this worrying scenario, it must be remembered that the shares of the banking group chaired by Ana Patricia Botín are now operating at a price that is half of what they were worth just a few months ago.

Decidedly, many savers have been caught totally off guard by these movements, even with surprise in some cases. But it is no less true that certain investment groups had been warning of this troubling scenario. Even some stock market gurus predicted the current stock market crashes and even more negative pronouncements. Specifically, they comment that the Ibex-35 can test the 6,500-point barrier.

To explain these sudden movements, there is no choice but to go to the the main drawbacks afflicting the global economy, and not without tensions in some geographic areas, including problems in countries of great specific weight in the current world order. All of them could give you a little more light so that you understand what is happening today today.

New recessive scenario

This is undoubtedly one of the worst scenarios handled by economists, and one that had an impact on the stock market crash. The arrival of a new economic crisis that affects the main industrialized countries. It would slow down the growth of these countries and its main effects would begin to be seen in the equity markets. However, there are serious doubts that it is a new recession. Or if on the contrary, it would be a last blow to the one that was generated in 2008. Whatever the case, fasten the seat belts, because in both cases falls in stocks would not have ended, far from there. And this may even be just the beginning, and always under the most alarmist scenario.

European banking under the magnifying glass of investors

It was exactly the European banking sector that was the last to weigh decisively the evolution of the stock markets. Not in vain these days circulate rumors about the bankruptcy of the almighty Deutsche Bank. The results of this giant of the German stock market are not at all encouraging. And with it, alarming investors who believe that a contagion effect could develop, as happened in Lehman Brothers in 2007. And this news, inevitably, scares the markets, and more if they are confirmed in the coming days.

But not only are German banks having balance sheet problems, Italian and French banks are also under scrutiny from large investment groups. From this phase, Not surprisingly, banking sector stocks are one of the hardest hit for this indentation that is developing in the parquets. In some, even leading the falls, and as it has been years that this negative trend has not been seen.

Economic slowdown of the Chinese economy

It was, last summer, the first warning for the sailors. In fact, the most experienced investors began to have the fly behind their ears, already undo their positions since last August. This ability has helped them curb their monetary losses and enjoy greater liquidity in a very turbulent period. And it seems to be due to the level of contracting in the markets, which continues like this five months later.

El crecimiento menor de la economía asiática ha sido el detonante para usar esta strategy de inversión. En cierto modo, ¿qué pasa en este lado del planeta? is decisively conditioning the evolution of other exchanges. Mainly in the bearish movements, which are the strongest since the beginning of the new year. Since the list of victims is very illuminating: emerging, raw materials, black gold, etc.

Warlike confrontations increasingly latent

Nor are they doing anything to reorient the global situation.. To this end, the game of chess being played in the Middle East encourages investors not to enter the markets, fearing that things could get worse. The escalation of the war, even if to a lesser extent, in North Korea is another discordant note for the interests of savers. And without forgetting, of course, the electoral processes that will take place this year in some countries (the United States, Spain and the Netherlands), which will generate more economic uncertainties in their respective areas of influence.

The oil that does not stop going down

It seemed that at the end of January the price of black gold tended to stabilize after its strong collapse last year. It was the fruit of a mirage of a few days. until last week has again broken new lows, standing dangerously close to the barrier of $ 20 a barrel. And with these prices, many countries are suffering its consequences with negative growth in their national accounts. This is the specific case of Russia, but in addition to the Persian Gulf monarchies, which are having serious problems adjusting their budgets. And that can seriously affect the international economy.

Interest rate hike in the US

The decision of the United States Federal Reserve to increase the price of money it has been another determining factor in explaining downturns in equity markets around the world. And that could significantly harm many of the emerging countries. At the same time, in these monetary scenarios, equity markets tend not to applaud these measures, quite the contrary. They are more prone to developing bearish processes.

The statements of certain financial analysts who alluded to the fact that the moment the economic stimuli disappear, the first effect would be transferred to the financial markets, with sharp falls in the stock markets. This is how it can be seen on the news almost everywhere in the world. Accentuating with falls in international markets.

Correction for excesses

These movements of collapse of the stock markets that you are seeing these days in equities cannot be ruled out either, they are due to corrections after the strong joys shown in recent years, with revaluations higher than 20%. Some financial analysts have no doubt that this may be the real motivation in stock markets around the world. Once completed, they resume the upward path again, which could even take them to the highs reached last year.

Whatever the case, and at the current prices that companies are quoting, it could consolidate the investment portfolio for a long term of permanence. With a high opportunity for its revaluation to be very optimal, in a good part of the values that make up the main stock market indices. Some managers even predict that today there are very good business opportunities, a scenario that was previously the case.

With all these variables laid out at the forefront of the table, only you should make the decision to invest in the markets. Definitively depending on the profile you present as a saver. And of course the level of risk that your personal accounts can take on. They will be the keys to dictate your entry or not in the equity markets today.

Even when whatever the case, prudence and prudence will be the common denominators of its actions in the financial markets. Above the viable profitability that you obtain with your life savings. Do not hesitate if you want to have more than one negative surprise during the next few months. Not surprisingly, they will be very volatile and with many fluctuations in their prices. And without forgetting that this type of investment is not mandatory, but you have other alternatives.