“December Market Blues: Could Risk of Downside Spell Disaster?

With December just around the corner, it is time to start taking a closer look at the stock market and the risks that we could see in the coming months. Unfortunately, many Wall Street analysts are predicting that the market may be in for a nasty correction in the coming weeks. The idea of a market downturn is based on a combination of macroeconomic factors which are projected to worsen. According to a recent report from the Financial Times, the U.S. economy is expected to face “an extended period of subpar growth, sluggish job creation, and elevated inflation.” Moreover, the U.S. Treasury Secretary has publicly declared that he expects to see a “surge” in coronavirus cases in the winter months. If the virus rages back to life, there is likely to be an economic shock which could lead to a dramatic drop in the stock market. Furthermore, Wall Street is expecting to see a significant lightening of the Fed’s monetary policy between now and the end of the year. This could lead to investors selling off stocks in anticipation of a drop in prices. Given the precarious situation, many investors are taking steps to protect themselves in case of a market crash. This could include reducing exposure in the stock market, investing in defensive assets, or waiting for the market to rebound before investing again. Overall, there is a high risk of market downside in December. Investors need to take precautions and be aware of the risks they are taking on. With the right strategy, however, investors can still achieve positive results.