Are We Over Dependent On The Stock Market?

Discussion in 'General Trading Discussion' started by gowiththeflow, Dec 4, 2018.

  1. gowiththeflow

    gowiththeflow Senior Investor

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    When you consider pension funds, company finance, government finance and many other issues revolve around the stock market and money markets, are we over dependent on stock markets?
     
  2. FTS

    FTS Member

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    Seems to be like that. There are a lot of correlations inside the markets, so each event can influence several companies and sometimes even industries.
    The other problem is that most of the market participants use margin capital. That is why they would have to close their positions in case of substancial correction, causing further downside movement.
     
  3. longtermbull

    longtermbull Administrator Staff Member

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    The stockmarket is the key to everything, fund raisings, takeovers, equity finance, etc. When the markets struggle there is a knock on effect to economies - just look back at some of the crashes in the past. Pension funds, company liquidity and much more also depend on the stock market. A perfect point in question, the securitizing of sub-prime mortgage loans back in 2008 which eventually led to the worldwide economic crash.
     
  4. fxstreet

    fxstreet Senior Investor

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    I think there are no two ways about this. Every big company has tied their future around the stock market, which is why a crash will affect everything. There is no choice here.
     
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