Global stock market crash at the beginning of 2022 / What is the stock market alternative?

According to Trade News, 2022 has had a difficult start for the global stock market. The sudden collapse of the global stock market was due to increased investment risk and the desire of investors to invest in safer stocks.

On Monday morning, the S&P 500 index fell about 4 percent, despite a 27 percent increase in 2021. The Nasdaq 100 was down about 7 percent, offsetting a quarter of last year’s growth. But the massive stocks of tech giants such as Alphabet, Microsoft and Apple, which grew by 65%, 52% and 35% in 2021, respectively, hid the weakness of smaller companies. But the growth trend of these companies was reversed at the beginning of 2022, and each of them decreased by eight, seven and four percent.

Quoted from Business InsiderThis downward trend followed the change in the Federal Reserve’s monetary policy by Jerome Powell in response to economic conditions. The two main goals of the Federal Reserve are to achieve the lowest unemployment rate and to keep prices stable. After the US unemployment rate rose 15 percent due to the corona outbreak, the Federal Reserve decided to cut interest rates so that consumer demand would not fall. He also bought various bonds so that companies that needed loans could get them. Although these policies pushed the unemployment rate below 4 percent, US inflation reached a level that was unprecedented since 1982. The Fed is now focusing on fighting inflation.

What is a good alternative to investing in the stock market?

This is bad news for high-value stocks and other risky assets, such as digital currencies, that have fluctuated sharply as bank interest rates have risen. High interest rates mean higher capital costs, which impairs companies’ ability to increase liquidity and expand. On the other hand, higher bond yields can be a good alternative to investing in high-risk stocks.

But despite the US Treasury rate of 1.8 percent, there is still a long way to go. In 2000, for example, the 10-year treasury yield had reached six percent, making it a good offer to protect capital.

But the collapse of the global stock market does not mean that investors are forced out of the market. Rather, it can give them a better perspective on investing, especially if they have been hurt by the recent fall.