Why did Stock market Plunge today? My Perspective

As we all know, today was a very rough day in the stock market! DOW plunged 831 points (3.15%), S&P 500 94.66 points (3.29%), NASDAQ 315.05 points (4.08%). If the stock futures are any indication then tomorrow too market is looking grim. DOW futures is down 1.14% as I write. The biggest worries for the stock market right now are rising interest rates, potential impact of trade wars/tariffs on corporate profits and the global economy. In addition, there are a couple of other factors - the landing rate in China has gone up in last few days and Bank of China is not doing much to increase the liquidity, some profit taking as the market has gone up for a decade. All these factored in to today's downfall. So, is it over? I wish it is ..but I do not think so. There is still no panic selling. Possibly, it may happen sometime soon and then market may bounce back. Let's see how it goes in next few days..

I think market is likely to bounce in next week/two provided earnings are good. It’s not entertaining to watch the portfolio on such day. One can just think of the worst and look the portfolio to avoid any kind of emotions or depression. It’s possible that NASDAQ may test 10% decline, which is about 100 points away. I guess it’s better to avoid panic selling. In my view, it’s better to sale on the bounce. As I perceive, it’s always better to keep taking profits during good times rather than bad time. If someone is panicked and take whatever profit left and run away then that's individual choice. How do we play this? All depends on available capital, amount of risks involved, time horizon and of course investor's experience. For me, I am selling any junk equity that I may have and adding little bit of the good/great stock which may have great potential in long term. Market correction do happen and that's good for overall health of the stock market. So, though it's painful, it's better to be positive. I am hoping that the correction will get over once good earnings starts coming and most likely we may end the year on a positive note. Finally -- no body knows the future, so how to invest is every investor's own decision. I will write more on my next blog. Stay tuned!

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