Will the Stock Market Crash Again Soon?

TL;DR

Yes, another stock market crash is likely as volatility remains high due to increased retail participation and algorithmic trading. With COVID-19 cases still rising and widespread business closures leading to record unemployment, the true economic impact will not be fully understood until second-quarter earnings reports are released in July.

Transcript

• So in this video today we are going to talking about whether or not another stock market crash is likely to happen. So the last week in the stock market has been absolutely insane. And just for a quick recap here guys, on March 12th the stock market officially entered a bear market. And this happens when a major stock index like the DOW, the S&P ... Read More

Key Insights

• 🧑‍🏭 The stock market's recent rally may be a false signal, as volatility continues to be a major factor.
• 💼 The number of coronavirus cases in the US is still growing exponentially, suggesting more business closures and economic impact to come.
• 🌸 Record-breaking unemployment numbers indicate a significant loss of jobs, with potential long-term effects.
• 🙈 The true economic fallout will likely be seen in the second quarter earnings reports, with uncertainty around revenue losses and the overall impact on companies.

Questions & Answers

Q: Why is the stock market more volatile than ever before?

The stock market has become more volatile due to increased participation, thanks to free trading apps, and algorithmic trading placing massive buy and sell orders at the end of the trading day.

Q: Will the stock market rally once the coronavirus pandemic peaks?

History suggests that stock market rallies occur after a pandemic peaks, but with the number of virus cases still growing exponentially in the US, the peak has not been reached yet.

Q: How has the coronavirus pandemic affected unemployment?

With businesses closing due to the pandemic, there has been a record-breaking increase in unemployment, with over 3.3 million people filing for unemployment. Economists predict that millions more will lose their jobs, leading to a significant impact on the economy.

Q: When will the true economic fallout be seen?

The full extent of the economic fallout will likely be seen in the second quarter of the year (April to June), but the earnings reports reflecting this won't come out until July.

Summary & Key Takeaways

• The stock market recently entered a bear market, but then experienced a three-day rally, leading to the shortest bear market in history.

• However, the market remains volatile due to increased participation and algorithmic trading, resulting in significant price swings.

• The number of coronavirus cases in the US is still growing exponentially, and businesses are closing, leading to a record-breaking increase in unemployment.