On top of the rising inflation and supply shortages bringing up the price of just about everything, the global economy is also taking a hit from the Russian invasion of Ukraine. This week the stock market took a dive in almost every sector, although we watched a recovery run today.
If you've taken a look at your 401k lately or personal stock portfolio, you may have had a bit of a fright, as prices have tanked on everything from the tech sector even to blue chip stocks like consumer goods.
But experts say now is not the time to panic and sell off your investments.
"People look at their investments and they look at it as a numbers game. It's 40 thousand...but is it 40 thousand or is it a percentage? What is that percentage? It's easy to recover from 5% decline, 7% decline, those small declines. I think that if you look at it at a percentage basis, you are much better off than looking at it as a numbers basis," said Laif Meidell, President of American Wealth Management.
That 5-7 percent was a common sight yesterday, as the Dow was down by 464, Nasdaq by 344 and the S&P 500 was down by 79.
Fast forward to close of market today, we saw a slight market rally, with the Dow up 92, Nasdaq up 436 and S&P up 63.
This is attributed to a speech by president biden today that seemed to calm the market...
“President Biden came out and spoke, and kinda gave the US policy on what we expect to do, because I think a lot of us were worried about how bad and how severe this conflict is going to get," said Meidell.
While the market decrease we've seen this week has a direct correlation with the invasion, it is likely something that would have happened in the technology sector regardless, as they have had a particularly bull market with many of the assets considered 'overpriced.'
“As inflation goes up, evaluations come down, and that's what the market is doing, it's been adjusting these evaluations down," Meidell said.
Russia is the 2nd largest oil producer in the world, and thus any interruption has a global impact. Gas prices started the day with 16 cents a gallon increase, but ended around 8 cents after the president’s speech. However, many tanker trucks filled up for distribution at that higher price earlier today.
“Gas stations are raising their prices to reflect the increase in cost, so Americans could be paying the higher price because of Russia's incursion as early as right now,” said Patrick De Haan, Head Petroleum Analysis for Gas Buddy.
Meidell says that now is not the time to panic, but rather make sure you have an emergency fund of 3-6 months expenses, and hold off on any large purchases until the market cools. “Whatever your plan was coming into this crisis needs to be your plan going forward, stick with that plan. Because you'll do a better job that all of a sudden changing that plan in the middle of the problem."
