Wall Street Tumbles – Creates Opportunity

Wall Street - Mack PrioleauWall Street continues to drop at an unnerving rate as traders unload stocks amid concerns of the struggling global economy. There has been a massive selloff of Chinese stocks, as it’s economy has faltered, leaving the government struggling to correct the problem.

China’s struggles, in addition to the Greek debt crisis, has now begun to create problems for people around the world, including the United States.

As mentioned in this article, The Dow Jones Industrial Average (^DJI) tumbled 302.7 points, or 1.8%, to 16158.4, the S&P 500 (^GSPC) dropped 43.4 points, or 2.1%, to 1929.6, and the Nasdaq Composite (^IXIC) fell 103 points, or 2.2%, to 4600.6.

Furthermore, China’s volatile Shanghai Composite (000001.SS) fell 8.5%, wiping out its gains for the year, while Japan’s Nikkei 225 (^N225) took a hit of 4.6%.

Traders have begun to position their investments in safer assets, such as the U.S. 10-year Treasury bond. The yield of this treasury bond has already fallen 0.06 percentage point to 1.988%, because when traders bid-up the asset, the yields of these assets begin to fall.

While these economic uncertainties have created a great deal of panic, many see a sharp drop in the market as a great opportunity for investment. When there is a widespread negative outlook of the economy, great stocks are often undeserving punished as well.

Peter Kenny, chief market strategist at Clearpool Group, is one of many investors who has remained positive through Wall Street’s tumble, stating that he remains positive on U.S. equities overall. “Great stocks get sold, and in some cases punished, not because of their lack of value but simply because the trend line for the broader market has faltered,” he wrote in a message to clients.

The current landscape has created an opportunity to purchase good stocks at an even better value, if you are willing to ride out this economic storm.