Millions of F0 investors are shaken by the fall of US stocks

Millions of F0 investors are shaken by the fall of US stocks

 

With unprecedented economic stimulus packages, millions of people are starting to enter the market in 2020. They are unprepared for the series of problems that shake the market today.


Concerns about rising interest rates, surging inflation and slowing growth due to global challenges sent major US stock indexes lower. The problem is that millions of new investors are not prepared for today's dangerous trading environment.



CNN pointed out that in the past 2 years, about 20 million people have started investing in stocks. According to a survey in 2021, first-time investors entering the market in 2020 make up 15% of the total number of investors in the market.

Cryptocurrencies and meme stocks have been incredibly bullish in the last year. Photo: Reuters.



Millions of investors F0

When the pandemic broke out, the US central bank lowered interest rates to near zero to encourage households and businesses to spend. The agency also injected trillions of dollars into the economy through its quantitative easing program.


With funds backed, many retail investors invest in hot growth tech stocks, meme stocks, cryptocurrencies, and other risky assets. Entering 2022, the stock prices of companies like GameStop, AMC, Bitcoin, and other cryptocurrencies have plummeted. Still, the S&P 500 is still about 20% higher than it was before the pandemic.


Investors were frantically buying meme stocks, SPACs, and NFTs. Now, we are witnessing an equally frenzied sell-off.

Mr. Leo Grohowski, Investment Director of BNY Mellon Wealth Management



These new investors have never experienced a period of high inflation and interest rates, according to Leo Grohowski, chief investment officer at BNY Mellon Wealth Management. The sudden change in the business environment will increase the turmoil in the market.

“Investors have been frantically buying meme stocks, SPACs (special purpose acquisitions), NFTs (non-fungible tokens.) Now, are we seeing a wave of crazy sell-offs? poor," he commented.

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