Why do people panic

Although we have seen tech companies provide us with a way to shred the social fabric, they have been given the credit to keep capital markets booming over the last year – but that could end.

This year has been marked by record gains and profits in the stock market, but much of the growth has been shattered in recent days and high tech companies are the main culprits. Specifically, all eyes are trained on "FAANG" actions – Facebook, Amazon, Apple, Netflix and Google. For more than a year, analysts have noted with concern that these top five stocks have performed exceptionally well and have become a barometer for the broader market.

At the opening Tuesday morning, FAANG shares had lost about $ 1.02 trillion since their last summit. Everyone has had their own problems and the general uncertainty is pushing investors back. Apple, for example, is down 19.92%, at the time of writing this article, since its peak reached Oct. 3. This is a little less than the 20% drop that defines a stock going into a bear market. For the first time this year, Google's parent company, Alphabet, was in the same bearish territory as the bell sounded on Monday and lost 25% early in the session. All other members of the group FAANG have exceeded the bar of 20%, Facebook especially striking. On early Tuesday morning, the struggling social media company was down about 40% from its July record.

Of course, it is always possible that things turn out. But the nature of the thing is that nobody knows it. Steven Wagner, chief executive officer of Omnia Family Wealth, told The Wall Street Journal: "Listen, you could have another explosive 20% rally, but we just do not know it. Nobody knows. So you have to ask yourself if you have to get every last penny of the table. "

FAANGs have become key commodities in hedge fund portfolios, and their performance is driven by an unparalleled belief in the potential for growth in sectors such as artificial intelligence and machine learning. But even when a company like Apple realizes record profits for the year, investors are unhappy with its prospects in the near future. On Tuesday, Goldman Sachs cut his forecast for the Cupertino giant. "In addition to weak demand for Apple products in China and other emerging markets, it also seems that the balance of price and features of the iPhone XR may not have been welcomed, "said Rod Hall, Goldman analyst, in a note. CNBC. The company is not expected to grow for next year, Hall wrote.

Apple remained stable in October while others fell, and it was considered a safe haven to guard against other losses. When a company like Apple gives up its business, it impacts the manufacturing and manufacturing of chips industry. The Journal estimates that the overall loss in value on the global stock market would be about $ 5.5 trillion since October. Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management, told the paper, "When you lose market leadership, people start to wonder if that indicates the whole market."

MarketWatch points out that investors are keeping an eye on another measure known as the disturbing "cross of death":

A cross-mortem refers to the time when the 50-day moving average of a price chart, seen by many as a short-term trend indicator, falls below the 200-day moving average, which many recognize as a dividing line between upward and downward trends. Technicians believe that the cross bears the beginning of a short-term downturn that leads to a long-term bearish trend.

Netflix produced his first death cross on Monday. Facebook received the black mark in September, while Google's death cross arrived last Thursday. According to MarketWatch, Apple and Amazon are both "in weeks" to form their own crosses of death. The Nasdaq Composite Index, which is very technology-oriented, is expected to produce its first crossover in the next two years next week.

In Europe, Nokia lost 4% and Ericcson was down 3.5%. And in America, non-FAANG technology stocks are also struggling. The biggest elephant in the room is NVIDIA, which has dropped 50% since October 1st. Many analysts are interested in this fall in the cryptocurrency market, for which NVIDIA GPUs are used in mining platforms. On Monday, Bitcoin reached its lowest price in 13 months.

To be clear, many factors contribute to the health of the overall market; Technology companies have just become a kind of finger in the wind for some investors. The Washington Post is taking a closer look at the factors that could lead to a recession in the near future, and the acronym FAANG is nowhere else. The earthquakes that occur on the surface of the markets do not necessarily mean lay-offs and economic disaster, but a gradual erosion of confidence could quite possibly. Keep in mind that Larry Kudlow was a financial analyst and a TV executive whom nobody had respected in 2007 when he said it was impossible for a recession to be on the horizon. Today, Kudlow is the main economic adviser to the Trump administration. Just a few hours ago he told reporters: "The recession is so far away, I can not see it. Keep the faith. It's a very strong economy. More comforting words have never been uttered.

A good holiday season could still relieve some of the pain, but without technological stocks providing enough security to protect against riskier bets, we could see a settlement that affects all sectors. In this case, we could shout to each other online and take stock of unemployment.