The double whammy of corona virus and an international price war on oil triggered one of those memorable days on the stock market. We had one back in 2008 and another in 1987. And then there was the renowned Tulip crisis in the 1600s.
This time it was COVID-19 impairing economic activity, triggering concerns the world would not need as much oil. When OPEC developed a plan to reduce output in hopes of raising prices, Russia stepped up and said….not so fast, offering lower prices to gain market share.
These two big players going at it triggered a collapse in oil prices for fear of a glut and that sparked the big stock market slide. It started with oil stocks and then spread to those who service the sector including the financial community.
The moves reinforce the stock markets’ laws of gravity and inertia: what goes up must come down and what comes down must go up.
What we have learned in previous versions of this is that every time the market drops dramatically, buyers soon find opportunities as investments are now on sale.