Gold, bitcoin fail to preserve investors from Thursday’s stock market meltdown
- In spite of Thursday’s stock market plunge, non-traditional and traditional hedges as orange and bitcoin weren’t immune from the sell-off.
- Technological innovation stocks led a steep sell off in the market, with the Nasdaq 100 index down almost as 5.5 % in Thursday afternoon trades.
- Gold traded down almost as one %, while bitcoin fell 6 % on Thursday.
- Typically, investors look to these non-traditional assets to offer protection during stock market sell offs.
Technology stocks led the marketplace decline, with the Nasdaq 100 index down pretty much as six %. Mega-cap tech winners like Apple, Amazon, and Microsoft fell eight %, 7 %, and six % respectively.
Meanwhile, the S&P 500 fell as much as four %, while the Dow Jones industrial average fell over 1,000 aspects for a loss of 3 %.
The high technology driven sell-off in the stock market spread to non-traditional and traditional profile hedges as bitcoin and yellow.
Gold fell as much as 1 % to $US1,927.20 per ounce in Thursday trades, while bitcoin fell pretty much as six % to $US10,455.
Both gold and bitcoin have recently been bid up by investors anxious about the growing balance sheet of the US Fed and its recent policy overhaul that will likely lead to greater levels of inflation.
Last month, gold touched all-time highs at $US2,089 an ounce, while bitcoin arrive at a multi-year high of $US12,473.
Investors typically look to both gold and bitcoin as a hedge to inflation, deflation, and falling stock prices owing to their historically small correlation to equities.
But that historical correlation did not play out on Thursday.
One traditional asset category which did give protection to investors from Thursday’s promote sell off was bonds. The Bloomberg Barclay’s US Aggregate Bond Index traded up pretty much as 0.20 %.
For all the conversation with Wall Street analysts that the favorite 60-40 investment portfolio that balances stocks & bonds is “dead,” it’s alive and nicely today.