Why Smart Money is Not Worried About Market Drops

A lot of people have watched the recent fluctuations in the market and began having flashbacks of the great recession. Have no fear, if you are invested in long term, stay put. The current chaos is driven by short term gains and fear. Banks are still lending, houses are still being bought, and credit markets are still in full operation. There are several key reasons for the economic down turn.

China

With China’s economy falling to growth levels lower than the 8 to 10% we are accustomed to. Markets around the world do not yet understand what a slowing China means for the rest of us. One thing is certain, when an entity as massive as China begins to slow and even drop after over thirty years of growth the market is going to react.

Crude

Pump Prices have been wonderful for consumers and commuters, but these prices are like poison to the marketplace. For the last several years oil prices have been overinflated for security reasons but with the recent influx of oil produced in the United States along with several small counties, reserves are full and production is grinding to a halt.

Near Zero Lending Ending

As a measure to improve the economy after the crash in 2008, interest rates were lowered to improve sales on homes. Eventually, the rates had to rebound. Unfortunately, that rebound occurred just in time to compound an already ailing market.

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