Financial crises are periods when uncertainty explodes. Uncertainty causes stress and questions, for investors, traders, and anyone who routinely reads the news.
News, financial and otherwise, ultimately causes a major headache.
The term “correction” is technically defined as a market drop within 10%. Above that level, and especially above 20%, is a decline that can give rise to a true bear market, as happened in 2022.
Financial memory is highly selective and tends to remember only major crises, such as that of 2007-2009.
However, looking more closely at the stock market charts of the last 50 years, there are at least 12 movements in the stock market that can be classified as strong bearish movements: one every 4 years.
In the past 23 years, we have seen the dot.com bubble of March 2000, the aftershocks of the September 11, 2001 attacks, the stock market crash of 2002, the bursting of the Chinese bubble of 2007, the aforementioned financial crisis of 2007-2009, the Dubai debt suspension of 2009, the European crises of 2010 and beyond, the cryptocurrency crash of 2018, and the stock market crash of 2020. Finally, the 2022 crash, led to a symptom of a banking crisis in 2023.
Going back, we realize that crises in themselves do not bring the end of the world, and are inevitable: but also, from crises emerge winners or losers.
Crises can arise from the bursting of speculative bubbles, or debt, or speculative transactions in real estate, rather than from events exogenous to stock markets, such as wars, oil crises, and pandemics.
However, each crisis has its own specific peculiarity and is different from the others: the current crisis has causes that have no real precedent in history.
The differences between one crisis and another are what make the stress of solving it so high because the solutions differ from case to case. One should not fall into the mistake of being emotionally involved in such emotional stresses.
The emotional impact of a crisis is food for the crisis itself. Maintaining lucidity is essential in times of crisis or the emotional impact will lead to wrong decisions. What does not take emotionality into account is Artificial Intelligence, which is why we trust our selection to Artificial Intelligence and Deep Learning algorithms with a very deep neural network that alerts us to the best times to buy and sell, diversifying the various industries, which make up our global index.