The Nasdaq Composite has been one of the protagonists for most of 2020 to date and has managed to recover quickly from the bear market caused by the coronavirus in late February and March, so much so that it has climbed to new all-time highs.
Nasdaq Composite in free fall: burned 600 points in one day
However, something has changed in today’s session, when the Nasdaq Composite ended trading with a thud of 4.96%, leaving about 600 points of its value on the parterre, after having dropped even further in the intraday.
The downward movement was so abrupt that it surprised many investors with its ferocity.
Nasdaq Composite: is it the end of the bull market?
For some time now, many market participants have been warning that Nasdaq’s earnings were unsustainable.
It is tempting to state that the end of the bull market has come for Wall Street and for equities in general for several reasons.
The reference is to the uncertainty linked to the pandemic, but also to the geopolitical situation and the economic tensions faced by the United States and all over the world.
According to Dan Caplinger, one of the contributors to The Motley Fool, before we go so far as to say that the end of the bull market is near, it’s important to keep some perspective.
Nasdaq Composite: premature to declare bull’s death. Here because
As mentioned earlier, today the Nasdaq Composite collapsed by about 600 points, slipping into the 11,450 area, with a lunge of almost 5%.
It sounds like a disaster and if you maybe take a look at your trading account today, you will see lots of red marks.
However, it is good to make some reflections: first of all it should be noted that in the last sessions the Nasdaq Composite has updated its all-time highs practically every day, pushing up to a top of 12,074 points yesterday intraday.
It should be noted that today the index returned to the levels of 25 August.
Some investors are panicking as the Nasdaq has fallen to the price it first saw a week and a half ago.
On the day the new record was set, the Nasdaq was up more than 700 points since the beginning of August.
That monthly income had only added to huge increases in April, May, June and July.
If it seems to you that investors have completely lost their perspective, then you are on the right track according to Dan Caplinger.
Just because the Nasdaq Composite has corrected after its huge gains so far doesn’t mean the bull market is over.
Nasdaq Composite: the case of Apple, Tesla and Zoom Video
The same goes for the individual shares: there are many people who look at the securities in their possession and feel even more uncertain.
In some cases, the percentage losses accused by individual stocks are far greater than the decline recorded by the Nasdaq index and sharp falls have also affected some of the leaders of the bull market.
Even in this case, however, the discounts are not so great when contextualized.
Apple, for example, has lost about 8%, returning to levels reached no later than 20 August last.
Tesla tumbled 9%, but it wasn’t until August 25 that the stock first closed above its current price level.
Zoom Video Communications left roughly 10% on parterre, but is still over $ 50 above the August 31st close.
Nasdaq Composite: what to do?
The lesson here is that if you look at the stock market moves on a daily basis, they will distract you from creating long-term value.
On this front, the Nasdaq Composite has done a great job, giving investors great satisfaction for decades.
So the advice is this: if you have a long-term strategy, stick to it and don’t worry if it’s a one-day reversal or the start of a broader correction.
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