DevDosh Ltd called the travel and hospitality drop weeks ago. Last time we looked Carnival Cruises was down 87%, Park Hotels and Resorts was down 86%, American Airlines was down 80%, Boeing was down 79% and Hilton was down 58%.
The airlines that had spent $45 billion USD on share buybacks were asking for a $50 billion dollar bail out with Delta Airlines wanting over $11 billion USD, American Airlines wanting over $12 billion USD, United Airlines wanting almost $9 billion USD and South West Airlines wanting over $11 billion USD.
Finally in this gloat of correctness, Boeing’s bond rating has dropped to just above junk status at BBB grade. Although that probably also has something to do with their airplane falling out of the sky as well as the sector drop.
Many people say lots of different things as to why markets crash. Credit swaps gone bad, housing markets gone wrong, technology bubbles bursting etc etc. We hear them at the end of every cycle. What actually makes markets crash is investors removing liquidity. There are many reasons they remove liquidity. Those reasons could very well be correlated to world events. However the world events are not the reason why market values drop.
The global economy has barely grown since 2015 yet equity prices have escalated in an artificially stimulated market.
Investors were prepared to buy into the tax breaks and hype while underlying value was static. While ever the Price to Earning Ratio’s were increasing because share prices were going up everybody was happy to float on to higher profit levels on the same baseless rising tide. However, market participants seem to be railing against continuing to pour money into stocks that are set to post massive reductions in profits in their next earnings report.
The market isn’t crashing because equities were overpriced, which they were. The market isn’t crashing because of Covid-19, human health does not effect the markets directly unless traders are off sick (and with high frequency trading algo’s that is not even the case so much these days). The market is crashing because traders and investors can not justify investing in stocks in a company that is losing money.
On the bright side. Post virus economy’s have a history of bouncing back quickly and at that point, hopefully, the market will return to normal trading patterns.
In the mean time, investors can put their money into debt investments with DevDosh Ltd. Debt investments are among the oldest forms of investments in the world and how the money markets first formed hundreds of years ago. Our investments focus on investor security as well as returns. We deliver a well balanced mixture of high yield and minimal risk. For the safest 10% return in today’s fixed income investment market, contact DevDosh Ltd.