New year, new president, unpredictable stock market
February 2, 2017
Several big names in the economic world are predicting that a stock market crash is coming, and soon.
“A $68 trillion ‘Biblical’ collapse is poised to wipe out millions of Americans,” said Jim Rogers, who co-founded the Quantum Fund, during an interview with Wall Street Daily. He is not the only one who believes that the stock market has found itself in a sticky situation.
Andrew Smithers, who is known for his prophetic economic knowledge, believes that “U.S. stocks are now about 80% overvalued.”
The stock market is thought to be on the decline for a number of reasons. Some believe that it is part of an inescapable cycle. Stock values plummeted in 1999 and in 2007, and now they are moving again in almost the exact same pattern.
Is this cycle inescapable? Maybe. The numbers have shown time and time again that volatility in stocks increases during election years and the years after due to changing world relations, and while that is sometimes for the better, this year may be the beginning of the next great depression.
Historically the stock market has always done better under Democratic presidents, growing an average of 9.7% under Democrats and only 6.7% under Republicans.
While those statistics are only one factor in the complex game of economics, there are experts who question whether having not only a Republican president, but a Republican president who does not have his party’s full backing, is going to add to the predicted stock drops.
On the night of the election itself, Japan’s Nikkei plummeted 5.4% and the Hang Seng in Hong Kong fell by 2.2%. Mexico’s currency has tremendously decreased in value, and one of the only countries to gain anything was Russia, with their main market index rising 1.5% in the expectation that Vladimir Putin’s connections to Trump will increase their positive diplomatic and economic relations with the U.S.
No matter what happens to the stocks, history has proven that panicking and pulling out of the market only makes things worse. All Americans can do is stay calm and see what happens.