Market analysis is an essential part of the financial world. A thorough understanding of what is going on in the market is vital, to carefully analyze trends taking place in the world. A good expert who can provide adequate information about the world market is always desired.
Market analysis is especially useful to avoid market crash and losses. Even though it is not a 100% guarantee for success, still, you can be ready to avoid complications. But right now, market analysis tends to be more harmful to the US market, and in this article, we will talk about that.
The Stock Market Crash in 2020
In 2020, amid the events surrounding the coronavirus pandemic, which significantly devastated the whole financial world, markets crashed around the world. US stock exchanges have experienced the largest drop since 1987 in March, and even market analysis was not helpful. However, no one expected that Covid-19 would take such a great scale. Right now, the situation seems to be improving, equities rebound in the US, but it is far from optimal.
The New York Stock Exchange on Thursday, March 12, experienced the largest – since Black Monday 1987 – collapse, despite the decision of the Federal Reserve System, acting as the US Central Bank, to allocate $1.5 trillion as short-term loans to stimulate the national economy and stabilize the financial system.
Thus, the Dow Jones industrial index at a certain point in trading lost 9.99 percent, dropping 2352.60 points to 21,200.62 points. The S&P 500 stock index, which includes the 500 largest companies in the US market and is called the “barometer of the American economy,” crashed 9.51 percent (260.74 points) and hit the mark of 2480.64 points. The indicator of the Nasdaq electronic exchange, specializing in shares of high-tech companies, went down by 9.43 percent (750.25 points), reaching a level of 7 201, 80 points.
That period was the main subject for various brokers and news pages. For instance, Axiory’s market news page conducted a comprehensive analysis of the situation taking place in the United States, and for brokers, of course, it was not too good.
What is Happening Now?
We mainly talked about the good side of market analysis, but, it should be mentioned that the latter is also fueling the market crash in the United States. First of all, when a lot of experts share their thoughts and analysis on the Internet, people tend to follow them, purchasing stocks, which are not really that effective, hence triggering the market crash. And we are talking about a decent amount of people here that are constantly involved in the stock market.
Imagine another situation, where a famous entrepreneur Elon Musk talks about the market and advises people to buy stocks, which look promising in the long-term. Personalities like Elon Musk have a huge impact on the people – they believe him and perceive as one of the most prominent experts in the market. If people buy stocks, that turn out to be ineffective in the long run, it further deteriorates the market.
So based on the general nature of the market analysis, it is indeed a good thing, but if many people start analyzing the market, then most often it becomes a driver for the crash.