We have seen with covid that the market can be very volatile, and inexperienced investors tend to panic in times like these. Although the recovery has not been perfect, and the new Delta variant seems to be spreading at a fast pace. We are now much better than we were in 2020. The fear has somewhat dissipated, and although the economic recovery might take some time, it will be accomplished. In the midst of all of this, economists have very different predictions, as to what is going to happen next. A stock crash is a possible scenario, although it might not happen.
Recovery
The pessimists were expecting an L-shaped recovery, which did not happen. Although it did not happen, that does not mean that it will not happen further down the road. This leaves investors with a sense of insecurity, restlessness and fear. As we approach the second half of 2021, some economic data seems to be showing signs of improvement. Most of the jobs lost in 2020 were created again, and businesses all over the world seemed to have returned to a somewhat normal state.
Delta Variant
The delta variant is now the main threat to world stability. This new deadly variant spreads faster, and it has devastating effects. We have seen how India has been suffering the consequences, with hospitals full of patients and infection rates running extremely high. As it spreads to other parts of the world, vaccination will be a key factor to spread this new wave of the virus
Stock market correction
With this new variant spreading faster and faster, the economic projections are slowly worsening. For stocks, and the stock market this could signal more trouble ahead. It is possible that new lockdowns and increased infection rates could once again pause the economic recovery. Although it is too soon to tell what will happen, it seems at this point that a stock market correction could happen at some point later this year. There is no way, we can be sure of this, and predictions are not always right. We will have to monitor how the situation unfolds, and try to act accordingly.
