The 7 causes to explain the stock market crash

If you are an investor, you are surely afraid of what is happening these days in the equity markets around the world, with the collapse of the stock markets. Not in vain, Stock markets have depreciated since the start of the new year by an average of almost 20%. Too much lost ground for such a short space of time, allude many of those affected. Given this, it is not surprising that many of the small savers wonder if this trend will continue in 2015.

There are still many doubts about the origin of these movements so rough in the markets. From analysts who argue that it is a mere correction movement, yes of great significance, even those who predict that it is a change in trend in every rule. In any case, few retailers are taking positions in equities under the current circumstances, quite the opposite: they sell their shares quickly in fear of further depreciation. And in any case, expectant about what may happen in the coming months, or at least in the shortest term.

In any case, there is one thing that is very clear and that it is convenient to note, that the trigger for these important crashes in stock markets around the world it is not due to a single cause. But on the contrary, to many and of diverse nature, as it will be shown in this article. And that they have the worst possible scenario in a new recession on a world scale. The truth is that it is causing small Spanish investors to lose a lot of money, more than imaginable.

Strong crashes of the bags

To check the depth of the stock market crashes, it is enough to remember that stocks, such as, for example, Banco Santander or Arcelor are very close to 3 euros. Something anomalous must be happening for them to trade at these low levels. But also in the rest: BBVA, Repsol, Telefónica, ACS and so on until reaching an endless list. From this worrisome scenario, it must be remembered that the actions of the banking group chaired by Ana Patricia Botín are now operating under a price that is half of what it was worth just a few months ago.

Of course, many savers have been caught completely off guard by these movements, even with surprise in some cases. But no less true is that from certain investment groups he had been warning of this worrisome scenario. Even some stock market gurus predicted the current stock market crashes, and even more negative pronouncements. Specifically, they say that the Ibex-35 can test the 6.500-point barrier.

To explain these abrupt movements, there is no choice but to go to the major problems afflicting the world economy, and not exempt from tensions in some geographical areas, even problems in countries of great specific weight in the current world order. All of them could give you a little more light so that you understand what is currently happening right now

New recessive scenario

This is undoubtedly one of the worst scenarios handled by economists, and one that has had an impact on the stock market crash. The arrival of a new economic crisis that affects the main industrialized countries. It would delay the growth of these countries, and its main effects would be beginning to be seen in the equity markets. However, there are serious doubts if it would be a new recession. Or if on the contrary, it would be a last knock of the one generated in 2008. In any case, fasten your seat belts, because in both cases declines in stocks would not have ended, far from it. And this may even be just the beginning, and always under the most alarmist scenario.

European banking under the magnifying glass of investors

It was precisely the European banking sector that was the last to decisively weigh down the evolution of the stock markets. Not in vain, these days circulate rumors about the bankruptcy of the almighty Deutsche Bank. The results of this giant of the German stock market are not at all encouraging. And with this, alarming investors who believe that a contagion effect could develop, as happened in Lehman Brothers in 2007. And these news inevitably scare the markets, and even more if they are confirmed during the next few days.

But not only the German banks are having problems with their balance sheets, the Italian and French banks are also under the scrutiny of the large investment groups. From this stage, It is not surprising that the values ​​of the banking sector are one of the most affected for this indentation that is developing in the parquets. In some, even leading the falls, and as it has been years that this negative trend has not been seen.

Economic slowdown of the Chinese economy

It was, last summer, the first warning for sailors. In fact, the most experienced investors began to have the fly behind their ears, already undo your positions since last August. This ability has helped them to stop their monetary losses, and to enjoy greater liquidity in a very turbulent period. And it seems to be due to the level of recruitment in the markets, which continues like this five months later.

The lower growth of the Asian economy has been the trigger for using this investment strategy. In a way, what happens on this side of the planet is decisively conditioning the evolution of other stock markets. Especially in the bearish movements, which are the strongest since the beginning of the new exercise. Since the list of victims is very enlightening: emerging, raw materials, black gold, etc.

Increasingly latent war conflicts

Nor are they helping anything to redirect the global situation. In this sense, the chess game played in the Middle East is encouraged that investors do not enter the markets, fearing that things could get worse. The escalation of the war, although to a lesser extent, in North Korea is another discordant note for the interests of savers. And without forgetting, of course, the electoral processes that will take place this year in some countries (the United States, Spain and the Netherlands), which will generate more economic uncertainties in their respective areas of influence.

The oil that does not stop going down

It seemed that at the end of January the price of black gold tended to stabilize after its strong collapse last year. It was the fruit of a mirage of a few days. Until the past week has returned to beat new lows, standing dangerously close to the barrier of $ 20 a barrel. And with these prices, many countries are suffering its consequences with negative growth in their national accounts. This is the specific case of Russia, but also of the Persian Gulf monarchies, which are having serious problems adjusting their budgets. And that can seriously affect the international economy.

US rate hike

The decision of the United States Federal Reserve to increase the price of money it has been another determining factor to explain the bearish movements in the stock markets around the world. And that could significantly harm many of the emerging countries. Furthermore, under these monetary scenarios, equity markets do not tend to applaud these measures, but rather the opposite. They are more likely to develop bearish processes.

The statements of certain financial analysts who alluded to the fact that the moment the economic stimuli disappear, the first effect would be transferred to the financial markets, with sharp falls in the stock markets, are long gone. This is how you can see in the news from almost everyone. Accentuating with declines in international markets.

Correction in the face of excesses

Neither can these collapse movements of the stock markets that you are seeing these days in equities be ruled out are due to corrections after the strong joys shown in recent years, with revaluations of more than 20%. Some financial analysts do not doubt that this may be the true motivation on the stock markets around the world. Once completed, they resume the bullish path again, which could even take them to the maximums achieved last year.

In any case, and at the current prices quoted by companies, it could cementing the investment portfolio for a long term of permanence. With a high possibility that its revaluation may be very optimal, in a good part of the values ​​that make up the main stock market indices. Some managers even predict that there are currently very good business opportunities, a scenario that occurred previously.

With all these variables put in front of the table, it is only you who has to make the decision to invest in the markets. Forever depending on the profile you present as a saver. And of course the level of risk that your personal accounts can assume. They will be the keys to dictate your entry or not in the equity markets at this time.

Although in any case, caution and prudence will be the common denominators of your actions in the financial markets. Above the possible return that you obtain with your life savings. Do not hesitate if you want to have more than one negative surprise during the next few months. Not surprisingly, they will be very volatile and with many fluctuations in their prices. And without forgetting that this kind of investment is not mandatory, but you have other alternatives.