The S&P 500 is now roughly 8.5% off its all-time highs last month, foreign stocks are getting hammered, and the crypto markets saw over $1 billion in liquidations over the past weekend. What is causing this selloff? There is no single culprit, but a mix of weakening economic data, Warren Buffett selling half his Apple stock, and the Japanese Central Bank raising interest rates are to blame.
The VIX, a measure of market volatility, traded above 65, which is the third highest reading after March 2020 and the 2008 financial crisis. Betting markets are now pricing in an 18% chance that the Fed does an emergency rate cut this year. A lot is happening very quickly and I can understand why it can feel a bit scary. As the saying goes:
There are decades where nothing happens and there are weeks where decades happen.
This may be one of those weeks where decades happen.
But let me provide another perspective. I’ve been writing on stocks and markets for the last 8 years and I’ve seen selloffs of varying degrees over this time period. If you don’t pay attention to markets, selloffs can feel scary because you don’t see them very often. Just look at how many mainstream financial services were down yesterday morning as investors checked their accounts:
But, if you are always watching markets, you start to get desensitized to them. Every time the market sells off a little and everyone starts panicking, I get the same thought, “This again?”
How many times have I been through this? How many times have I felt compelled to comment on a selloff that didn’t end making any real difference in a year’s time? Of course, maybe this selloff is different. 2020 definitely was. And this one has some of the makings
