eToro Compares Corona With Previous Crisis

eToro Compares Corona With Previous Crisis

Corona has caused one of the fastest sell-offs ever seen on the global market. How does this compare to other previous crisis? Well, eToro have answered that question in a new report released earlier today.  

The market behaviour since the start of the virus has caused serious concern and a mass reaction from traders. On a grand scale, it has taken just 21 days for the market to go from a peak to a bear market – a drop of 20%. This is the quickest market drop ever witnessed.

Quicker, in fact, then the Great Depression, the 2007 October crash, and all other financial crisis ever witnessed for that matter. In their new report, eToro have taken a closer look at the three key areas of the market, the S&P 500, FTSE 100 and Gold, and analysed this in comparison to other times of volatile time for the global market.

S&P

The first metrics they analysed were that of the S&P – the index that measures the top 500 US companies and is considered a good barometer for the US economy. When the economy is in good shape, it shows positive and when it is not, it shows negative. The 10-year average for the S&P has been shown an annual return of 7.99%.

The last major issue for the S&P was the mass crash of 2008-2009, owed largely to the US Housing markets collapse. Since then, the improvement has been huge and there has been a 500% bull run that lasted 11 years. Thus, it was thriving.

Of course, that was until the last few weeks and the change of fortunes has been monumental. The market drop though is largely different to that of 2009 as, unlike then, there is no underlying financial issue that caused the crash. Instead, it from widespread market fear of the unknown and those want to cash out in fear of what might happen.

The longer-lasting impacts of CoVid “are difficult, if not impossible, to predict”. However, the result will come down to whether it can be contained. If so, eToro believes there is no reason why investor won’t quickly return to the market and pick up these cheap stocks at a low price, as they generally do after a crisis, and push the S&P back up.

Gold

Gold is considered a safe-haven and therefore when the market goes pear-shaped, people quickly move to gold as a rule of thumb. This doesn’t always happen though and as eToro pointed out this hasn’t so far happened with CoVid. This also happened in 2008. In both instances, it is due to the uncertainty.

It is due to liquidity as many traders try to turn assets into cash. Currently, this is a similar thing that central banks are doing and “pumping additional liquidity into global economies to keep them ticking over”.

eToro believes that once the crisis is over and the numbers decrease, then people will likely flock back to gold. Currently, cash is king as the fiat currencies are suffering.

FTSE 100

The UK’s largest 100 companies on the stock market are currently down by 34% since the start of this year. Such drops have not been seen since the Brexit Referendum of 2016. Then, like now, the reason is uncertainty.

At this time, in the same way as the S&P, investors soon returned to these oversold stocks and everything recovered. This was just the latest in a long line of market drops that the FTSE 100 has suffered in the last 10 years alone. It is eToro’s belief that “the market is resilient “and permitting things go back to normal and CoVid doesn’t last for much longer then recovery is likely.

eToro also notes that while the red is scary, “more experienced investors, those who have lived through previous periods of market volatility, may take advantage of the opportunities this sell-off offers. The best prices come at the worst times”

You can read the full guide at eToro!

Recently Similar News

casinoin-promotion etoro-promotion

Latest Guides

Latest News

CoolWallet,Crypto Wallets,Cryptocurrency,Social Media

Read the CoolBitX and Horizen AMA

CoolBitX and Horizen hosted an AMA together and if you missed it, you can read a rundown of the event on the CoolWallet website now. The exchange platform that is part of the CoolWallet crypto wallet are in partnership with Horizen to create the Horizen CoolWallet. Their two respective social media team took the time […]

6 June, 2020
BitPanda,Cryptocurrency,Exchange Platforms,Promotion

BitPanda Celebrate Ontology Listing With 3 Giveaways

BitPanda has listed the Ontology project and to celebrate they are offering players the chance to get involved in a giveaway. The project has seen a listing on a number of other platforms in the last 8 months, including CEX and EXMO. This has substantially raised the profile of the blockchain that focuses on solving […]

6 June, 2020
CFD Trading Platform,Investment,Trading

Biggest News Stories of the Week, According to Trade.com

Trade.com have outlined what they believe were the biggest stories of the week for the trading world. The CFD trading platform, Trade.com have been active this week providing users with a rundown of stories that were going to affect the market. Now, with the week at a close, they have outlined their top picks for […]

5 June, 2020
CFD Trading Platform,eToro,Investment

eToro Who Suffered and Gained During Lockdown

While many companies suffered during the 3-month lockdown that came as a result of Covid-19 others have prospered. In their latest Twitter, eToro has outlined who exactly has gone up or down during this time. What most people will be most interested in is likely the biggest gainer and this title goes to Blue Apron, […]

5 June, 2020
CEX,Cryptocurrency,Exchange Platforms

CEX Launch USDT Trading Account

CEX have expanded their trading account possibilities with the option to create and use USDT-based trading accounts. This follows on from an earlier addition of ETH-based trading accounts and will follow an identical set-up, except these accounts will focus specifically around USDT. This is ideal if you have a lot of focus on the stablecoin […]

4 June, 2020
cfd,CFD Trading Platform,Investment,Trading

XTB Detail List of Rollovers

The exchange platform, XTB have posted a list of assets whose delivery dates will change. This means that when markets close today, the selected assets will have different delivery dates. The assets in question are BUND10Y, BUND10Y+, BUND10Y., BUND10Y, as well as SCHATZ2Y, SCHATZ2Y+, SCHATZ2Y. and SCHATZ2Y. The difference between prices between now and futures […]

4 June, 2020
CFD Trading Platform,Investment,Trading

US Nonfarm Payrolls and Unemployment Rate Set For Release

Trade.com have alerted users of the US Nonfarm Payrolls and Unemployment Rate which is set to be released on June 5th. The platform made users aware of the news over their Facebook page with their latest post detailing the release of the data on Friday. The post explained that “this is always a market mover […]

3 June, 2020
CFD Trading Platform,Plus500

Plus500 Announce New Sponsor, BSC Young Boys

Plus500 have unveiled their new sponsor, BSC Young Boys Football Club. Ths Swiss outfit, BSC Young Boys will join a selection of other existing partners of the CFD trading platform, which include Atletico Madrid from the Spanish La Liga and Australian Rugby team, Plus500 Brumbies. As such, the BSC Young Boys join a good alumnus […]

3 June, 2020