The “Black Monday” and Its Global Impacts
The recent stock market crash on Wall Street, known as “Black Monday,” has triggered panic worldwide. US futures have plummeted significantly, and US President Donald Trump’s announcement of imposing substantial tariffs on many industrial nations has severely affected global trade relations and increased the risk of a recession in the USA.
1. Diversification of the Portfolio
A diversified portfolio can help minimize risks. Long-term investors should spread their investments across various asset classes and geographic regions. This can help offset losses in one area with gains in another. In times of market volatility, it’s important to invest not just in stocks but also in bonds, real estate, or other assets.
2. Maintaining a Long-term Perspective
During phases of panic and market losses, many investors tend to panic and sell their investments. However, long-term investors should remember that markets have historically faced crises but ultimately recovered. It is essential not to react to short-term market movements but to focus on long-term trends and opportunities.
3. Seizing Cost-effective Buying Opportunities
A stock market crash can also present opportunities to invest cheaply in companies that are strong for the long term. Investors should look for such opportunities and purposefully invest in companies with strong balance sheets and solid business models. This can lead to an increase in value in the long run once the markets recover.
Current Market Movements and Their Impact on the European Market
The current market movements on Wall Street have already had significant effects on the European market. The DAX and other European indices have also suffered massive losses in recent days. The fear of a global recession and uncertainty in trade have led to a decline in global stock market capitalization. European investors should prepare for these developments and adjust their strategies accordingly.
Recession Risk and Geopolitical Uncertainty
The likelihood of a recession in the USA is assessed as high by many experts. Goldman Sachs has raised the recession risk for the next twelve months to 45 percent. This uncertainty and the geopolitical tensions are contributing to market losses and increasing the need for investors to act cautiously and strategically.