Finance

2021 Stock Market Crash…6 Reasons For and Against

2021-stock-market-crash6-reasons-for-and-against



Why are stocks falling and is this the start of a 2021 stock market crash? I’m outlining three reasons why a market crash won’t happen but why it might feel that way to investors. Get all the stock market news, trends and strategies you need with The Daily Bow-Tie! Sign up Free https://mystockmarketbasics.com/dailybowtie

The stock market just had its worst week since October and the worst single day since last year’s market crash. Volatility has surged and investors are wondering if this is the start of a 2021 crash in stock prices.

First let’s look at why stocks are falling, then I’ll share reasons why there will not be a stock market crash but why it could feel that way for many investors. Then I’ll give you three strategies to invest your money in a market crash.

The big story lately causing stocks to fall is surging interest rates and the potential for inflation. If inflation jumps, it could cause the Fed to hike rates further and cut off easy money programs that have taken stocks into bubble territory.

Even without higher inflation though, interest rates can cause stocks to fall because it makes bonds and other yield investments more attractive. As interest rates increase, it decreases the present value of future cash flows and the fair value for stocks. It also makes the earnings yield on expensive sectors like tech less attractive.

But I do NOT think there will be a stock market crash in 2021 for three reasons. We’re expecting 5% economic growth this year and stocks rarely crash when the economy is growing. We also could see as much as $1.5 trillion in consumer spending propping up stock prices as early as this summer. Finally, borrowing is still super-cheap on low rates and we’re expecting at least another $2 trillion-plus in stimulus.

There are a few reasons why we could get a market crash or why even a 10% correction could feel like a stock crash. The market is forward-looking so towards the end of the year, it’s going to start pricing in the 2022 economy and environment…and that could cause stocks to fall. A lot of investors are all-in on high-beta names that move two- or three-times the market so if the market falls by 15% then those stocks could crash 30% or more and take your portfolio with it. There will also likely be a rotation out of growth stocks and into value or cyclicals. While the overall market might not crash, some growth or momentum stocks could crumble.

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Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through debt payoff strategies, investing and ways to save more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.
#stocks #stockmarket #stockmarketcrash

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Robert Dunfee

23 Comments

  1. Let's Talk Money! with Joseph Hogue, CFA
    July 17, 2021 at 1:39 am

    Get all the stock market news, trends and strategies you need with The Daily Bow-Tie! Sign up Free https://mystockmarketbasics.com/dailybowtie

  2. Larry Yeadeke
    July 17, 2021 at 1:39 am

    Excess cash? Wtf are you talking about? Many people haven't been working for almost a year. They will use that money to try and catch up on bills.

  3. Jeff Woodard
    July 17, 2021 at 1:39 am

    albuquerque, new mexico

  4. B
    July 17, 2021 at 1:39 am

    Everyone starting to talk about a market crash, will cause a market crash. Every financial youtuber is contributing to it!

  5. Steven Barthelmy
    July 17, 2021 at 1:39 am

    Tucson Az

  6. Kate Phillips
    July 17, 2021 at 1:39 am

    Lol, “The market is like a crackhead… Even when it’s hard, it’s looking for its next score.” 😂

    “And if it doesn’t see that next rock in its future, it’s coming down pretty quick!”

  7. David Hughes
    July 17, 2021 at 1:39 am

    I listen to a lot of content on Youtube regarding Stocks.. but you are my go-to, thank you, Joseph, you are among the few who not only talks sense and brings new food to the table

  8. Matthew C
    July 17, 2021 at 1:39 am

    I just added VNQ and O to my portfolio instead of bonds. Only 5 shares each. I'm a longterm investor.

    Is it still too early to be buy into them as you mentioned the yield will probably pull back?

  9. Super Alexandre
    July 17, 2021 at 1:39 am

    "Market"? This is funny – there is no market there is only FED

  10. L Rodrigues
    July 17, 2021 at 1:39 am

    Is Joe a little toasted 🤣

  11. Mike
    July 17, 2021 at 1:39 am

    "market wont crash in 2021 however market could crash in 2021" WTF? Lol, these market gurus always playing it safe.

  12. Lifters Gym Albemarle
    July 17, 2021 at 1:39 am

    Hate the ending was edited out Joseph. The Q&A was great!

  13. Bryan Moore
    July 17, 2021 at 1:39 am

    J- I have been subscribed since last year. I am looking for a way to get a little help. I'm a disabled vet, little bit of cash and need to grow it for 5 to 10 years and need good returns. Was hoping I could get 5 minutes of your time. Im sitting confused at where to put a small windfall. Help.

  14. Sara Fox
    July 17, 2021 at 1:39 am

    Thank you for your time ⏲️ your a good man.

  15. Sara Fox
    July 17, 2021 at 1:39 am

    I'm from Northern Indiana

  16. Erica lynn Mendoza
    July 17, 2021 at 1:39 am

    I never knew bitcoin mining could be this lucrative until I invested with Mr Chris Benson. He keeps saving me from financial hudles🙌🙌

  17. jason solley
    July 17, 2021 at 1:39 am

    watching from Iraq

  18. Brent Metcalf
    July 17, 2021 at 1:39 am

    "The markets like a crackhead, allways looking for that next rock" love it! People will be quoting that in 50years time rather than buffet….. Great video as always…. Your the best investing channel by a mile. Keep up the good work. 👍

  19. Reno Storm
    July 17, 2021 at 1:39 am

    Getting hit hard. Back to stage 1.

  20. Karen Lee
    July 17, 2021 at 1:39 am

    Thanks for the bigger picture!!

  21. mrjsanchez1
    July 17, 2021 at 1:39 am

    I would keep an eye on oil and natural gas prices, that will have more of an impact on creating inflation than any fed monetary policies. If the current USA administration continues it's planned war on fossil fuels, it will cause severe economic problems and hardship for most American's. I am hearing lots of talk of 100 dollar a barrel oil prices again, plus other commodities are getting very pricey. Another thing to consider is all the talk of automobiles going completely electric in 12 to 20 years, we will need massive spending on new power plants, transmission lines, etc. The current system is barely covering consumer demand now in many places, look at California and Texas for example.

  22. Jessica W.
    July 17, 2021 at 1:39 am

    From Montreal, Canada

  23. John K
    July 17, 2021 at 1:39 am

    Yield going down gold up yomorrowb