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Right now, the internet is buzzing with panic.
“The stock market is doomed. I’m selling everything.”
That’s the kind of comment popping up all over social media. Stocks are dropping. Crypto's sliding. And for new investors—especially those who’ve just gotten started—it’s terrifying.
So in this post, we’re going to break it all down:
- Why the market is falling
- What’s really going on behind the headlines
- And what I personally recommend you do right now to protect (and maybe grow) your money
Let’s not waste time. This is one post you don’t want to skip.
Why Is the Stock Market Crashing?
To give you some perspective: the S&P 500 dropped 3% in a day—its biggest one-day loss in nearly two years. The Dow fell 2.6%, and the NASDAQ slid 3.4%.
Yikes.
So what's causing all this? From my research, it boils down to four major reasons:
1. Recession Fears
Let’s start with the most obvious one: people are worried about a recession.
Now, it’s true that recessions usually drag the market down. But it’s not always the case. In fact, back in 2020, during a recession, the S&P 500 returned over 16%.
But generally speaking, when people stop spending, businesses earn less. Companies lay people off. Unemployment rises. People spend even less. It’s a nasty cycle.
The stock market, being a leading indicator, tends to react early. So when we see:
- Only 114,000 jobs added in July (vs. 150,000 expected)
- Unemployment rising to 4.3%
… people start freaking out.
Even though these numbers aren’t terrible, they triggered the Sahm Rule — a predictive indicator that’s been accurate in calling every US recession since WWII.
Should You Panic?
Not necessarily. Even Claudia Sahm, who created the rule, says she doesn’t think it’s accurate this time. Why? Because unemployment is rising not due to layoffs, but because more people are entering the workforce.
But yeah, some companies are seeing a slowdown:
- McDonald’s and Walmart both reported customers spending less.
- Wayfair saw spending drop nearly 25% compared to three years ago.
That said, Goldman Sachs still thinks a recession is unlikely, even though they bumped up the odds slightly.
2. Interest Rates
Here’s where it gets interesting (pun intended).
Historically, every time the Federal Reserve cut interest rates from their peak, a recession followed.
Well… they just hinted they’re preparing to cut rates again.
But here’s the key difference this time: they’re not cutting to fight a recession. They’re cutting because they’re finally nearing their inflation target.
Inflation hit 9.1% back in 2022. But it’s come down a lot since then. Once it’s under control, cutting rates can actually be a good thing for the economy:
- Lower rates = easier borrowing
- Easier borrowing = more spending and growth
So while past rate cuts were “emergency moves,” this one looks more like a planned step toward recovery.
3. Tech Stocks
If you hold any big tech stocks—or even just an S&P 500 index fund—you’ve probably felt some pain recently.
That’s because seven tech giants (Apple, Amazon, Alphabet, Meta, Microsoft, Tesla, NVIDIA) make up over 30% of the S&P 500.
Why the drop? Simple: AI hype went too far, too fast.
Everyone got excited. Stock prices soared. But now, reality is setting in:
- Apple’s AI demo was underwhelming
- NVIDIA’s new Blackwell chips are delayed due to design flaws
- Even Warren Buffett’s Berkshire Hathaway sold nearly half its Apple stake
Sound familiar? If you lived through the dot-com bubble, this might feel like déjà vu.
Booms are often followed by busts. It doesn’t mean the technology isn’t valuable—just that prices got ahead of themselves.
4. The Japanese Yen Loophole
Here’s a weird one that most people haven’t heard about.
For years, traders were borrowing money in Japanese yen (which had super low interest rates), then investing it elsewhere.
Why? Because when the yen dropped, they repaid the loan with devalued currency—and pocketed the difference.
But recently, the Bank of Japan raised interest rates, making that trade riskier. Suddenly, those traders had to sell off assets to cover their losses, causing even more downward pressure on the markets.
Thankfully, Japan has since backed off aggressive rate hikes, so the worst of that panic might be over.
My Thoughts: What Should You Do Now?
First off, I’m not a financial advisor. But here’s what’s worked for me over the years:
1. Buy When There’s Blood in the Water
It’s a bit of a cliché, but it holds up. The best time to invest often feels like the worst.
If you have:
- A 3–5 month emergency fund
- A long-term time horizon
Then this could be your moment. When people panic-sell, prices drop below their real value. That’s when long-term investors quietly step in.
2. Dollar-Cost Average (DCA)
Don’t try to time the bottom. Instead, invest small amounts consistently—daily, weekly, whatever works for you.
This strategy works especially well with low-cost index funds like the S&P 500.
3. Diversify
Even if you’re investing in index funds, remember: the S&P 500 is tech-heavy.
You might consider adding a Total US Stock Market fund, or sprinkling in bonds, international stocks, or even crypto to spread your risk.
4. Zoom Out
Corrections happen. On average, markets drop 10% or more every 1.5–2 years. What we’re seeing right now isn’t unusual.
In fact, since January, the S&P 500 is still up 9%.
Remember this quote:
“When the stock market goes up, it takes the stairs. When it goes down, it jumps out the window.”
We’ve just had a massive stair climb—and yeah, now we’ve taken a sharp drop. That’s normal.
If you’re thinking of starting your investing journey, now might actually be a great time. Lower prices = better entry points.
Bonus: Free Stock Offer
If you’re looking for a platform, I recommend Trading 212. They’re offering a free fractional share worth up to £100 when you use the code TILBURY.
Plus, you get another free share when you invite a friend and they fund their account.
Final Thoughts
Look, I’ve been through market crashes before: 2008, 2020, and more. They suck while they’re happening. But every single time, they’ve turned out to be great opportunities in hindsight.
Don’t panic. Stay consistent. And above all, keep learning.
If you want to know how I pick individual stocks, check out my next post (coming soon!).
Until then, stay calm and keep investing.