Analyst: Facebook Collapse Could Be Psychological Trigger for Stock Market Crash
Posted By | April 6, 2018
Interest rate hikes and trade wars are not the only potential triggers of a stock market crash. Investor psychology can be as important as any economic fundamentals for determining what comes next for markets. In an article recently published at ZeroHedge, well-known financial analyst and author John Rubino says he believes recent investor behavior shows a rapidly-intensifying lack of confidence in a handful of key stocks – and indicates a darkening investor psyche that could be the straw that ultimately breaks the back of the markets.
The stocks Rubino is referring to are for the super-performing technology giants that have come to be known collectively by the acronym FANG: Facebook, Amazon, Netflix, and Google (now Alphabet, Inc. since a legal restructuring). Lately, some have chosen to update the acronym to “FAANG” for the purpose of including Apple, as well.
This group of stocks is considered a bellwether of investor psychology because many believe their growth potential remains so strong it can overcome negative market fundamentals. The thought is that, as long as technology continues to evolve, these powerful and visionary companies can continue to grow well into the future without taking any meaningful backsteps.
Except…now we’re seeing backsteps. Big ones.
Facebook Stock Leads the Way Into Bear Territory
In the wake of revelations concerning the Cambridge Analytica data breach, Facebook stock has fallen all the way into bear territory, down 20%. Some observers, like Rubino, believe the company is taking its peers down with it. Amazon is off roughly 14 percent. Netflix is well into correction territory, presently down 15 percent. Google is also down 15 percent. And if you want to throw Apple in there, it’s presently down about 8 percent.
Pondering the near-term investment future of these giants, Rubino wonders:
“Does Google have data privacy issues that will come back to bite it? Has Amazon antagonized the president enough to be slapped with a national sales tax? Did Apple over-price its latest phone to the point that customers don’t want it?”
Saying that “everyone” is now asking these questions, Rubino adds his punchline:
“…that, in a nutshell, is how markets morph from bull to bear. It’s not about fundamentals, but about which fundamentals are seen to matter. And generally it takes a high-profile object lesson to shift investor psychology from one extreme to the other.”
So is there a change afoot in investor psychology that will “morph” the markets “from bull to bear”?
Performance of Facebook (FB) from Feb. 2, 2018, to April 3, 2018.
Will the current collapse of the tech and social media giant’s stock hasten the arrival of the bear?
Chart Courtesy of StockCharts.com
Very possibly. But regardless of which cue you take to get moving and protect your money, now is the time to prepare. Some analysts are expecting a market collapse of up to 40 percent. Are you prepared to sit by and watch 40 percent of your retirement account disappear?
How to Protect Retirement Money: Consider the Gold IRA
There are steps you can take to prevent that from happening, including the allocation of at least part of your IRA or 401(k) into inflation-protected assets such as physical gold and silver. Precious metals remain reliable stores of value with the capacity to significantly grow in value during economic turbulence. To learn more about the investment potential of a silver or gold IRA, give Augusta Precious Metals a call at 855-242-4121 and ask to speak with one of our retirement specialists.
There are any number of compelling reasons why the stock market floor finally will give way. And the likelihood is that it will not be one reason, but a few, that could conspire to wreck the equities markets and countless retirement portfolios. One of the strongest of those reasons could be mass psychological disillusionment on the part of investors. The good news is, with all of the warning signs presently visible and the potential offered by a gold IRA (or silver), there’s no reason you have to be one of the victims.
Your Future and Your Legacy!
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