Don't Freak Out: Market Panic Is Often Misplaced

(6min)

Summary

  • Despite fears of a trade war, recession and a strong dollar, market panic is often misplaced. Extreme bearish sentiment can signal a market rally.
  • Historical data shows extreme bearishness often precedes market rebounds, even though current bearishness comes without sustained declines.
  • Increased global liquidity and potential rate cuts could boost markets, while falling inflation may allow for some economic stimulus.
  • Stick to your investment strategy and long-term goals. Consider conservative, undervalued dividend stocks for stability and growth.
  • Looking for a helping hand in the market? Members of The Dividend Freedom Tribe get exclusive ideas and guidance to navigate any climate. Learn More »
Businessman looking at falling down red graph tensely.

Pla2na/iStock via Getty Images

Written by Sam Kovacs

OK, I get it. It looks bad.

A trade war freaks everyone out. Reduced government spending is increasing the likelihood of a recession. A stubbornly strong dollar is bad for the global economy.

But don't freak

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I do not own the SPY, but own some of its constituents.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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