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What To Make Of Wednesday’s Global Market Sell-Off

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The stock market witnessed a vicious sell-off yesterday. The Dow Jones Industrial Average [DJI] plunged 832 points, with technology stocks at the forefront of this correction.

The Invesco QQQ ETF [QQQ] fell 4.4% while the Technology Select Sector SPDR ETF [XLK] declined 4.9%. The sell-off was similar to the one witnessed earlier this year in February.

However, Jamie Cox from Harris Financial Group is not too concerned. Cox stated, “This was way different than February and March. In February, everything got shellacked. Even banks didn’t get hit that bad today. It wasn’t what you’d expect in a full-blown washout sell-out. To me, that was the most important piece, that this is not going to herald something worse.”

What drove the sell-off

This year has been a rather bumpy ride for investors. Markets have been impacted by escalating trade wars between the United States and China and rising oil prices. Recently, there have been concerns over the upcoming earnings season.

But the primary driver for yesterday’s slump were concerns over the rising FED rates. The 10-year U.S. Treasury yield is close to the 10-year high of 3.2%. Investors are right to skeptical about a rise in interest rates as higher rates tend to restrain economic growth.

FAANG stocks routed

The FAANG stocks, Wall Street winners for several years, lost close to a combined $180B in market value. FAANG is an acronym for internet giants Facebook [FB], Apple [AAPL], Amazon [AMZN], Netflix [NLFX] and Google [GOOG].

Joe Saluzzi from Themis Trading stated, “A lot of the high flyers are the ones that have gotten beat up. The FAANG stocks, the Amazons of the world, they are up ridiculous. Those are momentum-type trades. A little air coming out is a healthy thing as long as fundamentals haven’t changed. I don’t have a problem with that type of sell-off.”

Sell-off picks up speed, impacts global markets

The sell-off was not limited to the United States market alone. According to this Wall Street Journal report, the Stoxx Europe 600 fell 1.8% in early trade while the mayhem in China continued with stocks falling 6%.

Indices in Japan, South Korea, and India were also down in early market trading. Analyst Paras Anand from Fidelity International stated, “The sharp selloff in the U.S. has likely caught no one by surprise. If anything, market participants have been wondering how, in the face of tighter money, a tighter labor market and rising oil prices, the U.S. has continued to be so resilient.”

Earnings season important

The upcoming earnings season is critical for the health of the stock market. Investors are wary about inflation impacting corporate earnings, driven by higher input costs. In case companies can outperform market estimates, we might be in for another short-term bull run that will take indices to record highs by the end of 2018.

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INFOGRAPHIC: How To Invest Your Money (In 8 Simple Steps)

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Plenty of savers are making do with low rates of return on their deposits—almost eroding the value of their savings. Here’s a guide on how you should invest your money and gain some great returns off it.

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Stock Trading: How to Choose the Best Online Brokers

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Stock trading can be a risky business but done right it is an extremely lucrative investment option which yields excellent returns. It is true that trading is quite intimidating for someone who is new to the market and its ways which gives rise to the need for a good stock broker who can handle the job and ensure that the client gets the best returns possible for the money he or she is investing. But as a new investor it is absolutely important that you choose a very good trading broker. Here are some tips that will help you make that choice better.

Understand your trading needs

Before you even look into the services of a trading broker, it is essential that you are aware of your goals and needs from your stock trading. Firstly, prioritise your investment value, short term and long-term goal, and time that you are willing to spend on your trading in order to figure out where you stand. Now, narrow down on the specific kinds of stock exchange that you are looking into. With the wide variety of options available that you can choose from, it is important to narrow down to the specific field or fields and finally look for brokers who suit your specific needs.

Have a clear talk about trading fees

It is important to have a clear-cut discussion on brokerage fee and commissions that your broker will charge you. Ask about the charges per transaction, basic account charges, account minimums and even reimbursements if and when you choose to part ways so that you can have a proper idea about how much you are about to fork out for your trading. It is a good idea to have the talk beforehand so that you do not get into an arrangement which later becomes financially burdensome for you.

Look up reviews on the broker

You would not buy a new product without checking what its previous users have to say, right? Similarly, look up your prospective brokers No matter how promising or lucrative a broker seems with the terms, make sure you check the reviews by InvestinGoal to ensure that you are actually getting a good deal and not being sweet talked into not a good broker or even worse, being conned of your money.

Ask your questions

Do not be afraid to ask whatever questions that come to your mind before you make a deal. This will help you understand your trading better and thus, to get the absolute best out of your investment. It will also help you uncover any hidden charges, non transparent clauses as well that might have later hindered the desirable growth of your stock.

Give a test run

Ask the broker if you can give a test run of your account, and his technology before you actually invest your hard earned money. Many brokers allow you to create a free account which you can use to test their platform and check out user friendliness, ease of trading, quality of tools etc and thus, make an educated decision.

Getting the right broker is definitely one step towards a good stock trading investment. Therefore, it is very important that you take utmost care in picking the very best broker for your trading needs.

This article originally appeared on ValueWalk. Follow ValueWalk on Twitter, Instagram and Facebook.

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3 Simple Steps To Build Your Investment Portfolio

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If you’re starting out with planning your investments, chalking out your goals and how you’d like to achieve them is incredibly important. You’ll need to understand what kind of assets you’d like to invest in–be it exotic instruments like private equity or the tried and tested ones like the treasury bonds, ETFs and stocks–and invest right. Here are three key strategies to build your portfolio:

1. Building Wealth Is All About Thinking Rationally (And Smart)

Having the right mindset can play a huge role in how you build your investments. It’s simply not just about strategy. To ditch following the latest fad in the market, you need to be responsible and have a sense of social indifference–coupled with confidence and patience.

2. Invest Like A Cheapskate

If you’re pumping in $150,000 as investment, on which you incur 1% as fees, look out for ways through which you can cut them down.

If you were to cut costs by a little more than a half, that’s saving you at least $1,120 in fees every year. But that’s not it–when this saving is compounded every year, that 1% fee can tally up to a million (if saved, could win you your big ticket to becoming a millionaire!)

3. The KISS (Keep It Simple, Silly) Rule

Funnily enough, most of us think investing your way through millions demands extensive knowledge of financial instruments or strategies. Surprisingly, it’s the simplest of assets that gave the biggest investors their biggest wins. Many successful investors highlight their success to stocks, bonds and other popular alternative investments, patiently held over time.

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