Wall Street has witnessed $1 Trillion erased from markets since the dawn of 2016, deepening fears that a global slowdown and a potential collapse in China are going to impact the American economy heavily in the coming year.
So what’s behind the economic whiplash? The short answer is that low oil prices and a slowing China have caused fear and uncertainty – the two troublesome twins investors hate most.
With the price of crude dipping below $30 for the first time in 12 years and China stocks getting rattled in the first week of the year, causing several ‘circuit breaker’ shutdowns, many are worried and for good reason.
What do investors do when they’re worried? You guess it, they pull out their money!
So far, they’ve done so to the tune of over $1.3 Trillion in the S&P in the first week of 2016 alone.
So what should you as an investor do? It would be wise to sit back and wait out the storm. As things stabilize in China and OPEC members call for an emergency meeting to put an end to plunging oil prices, things could calm down sooner rather than later.
Then again…there’s no guarantee they will. Risk off is the best strategy for now, and it looks like most investors agree.