Gold, bitcoin neglect to safeguard investors from Thursday’s stock market meltdown

  • In spite of Thursday’s stock market plunge, traditional and non-traditional hedges like orange as well as bitcoin were not immune from the sell off.
  • Technological innovation stocks led a steep sell off of the sector, with the Nasdaq hundred index down as much as 5.5 % in Thursday afternoon trades.
  • Gold traded down as much as one %, while bitcoin fell 6 % on Thursday.
  • Often, investors seem to these non-traditional assets to offer protection during stock market sell-offs.

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Engineering stocks led the marketplace decline, with the Nasdaq 100 index down as much as six %. Mega-cap tech winners as Apple, Amazon, and Microsoft fell 8 %, seven %, in addition to six % respectively.

Meanwhile, the S&P 500 fell almost as four %, while the Dow Jones industrial average fell over 1,000 steps for a loss of 3 %.

The high technology driven sell off in the stock market spread to non-traditional and traditional portfolio hedges as gold and bitcoin.

Gold fell pretty much as 1 % to $US1,927.20 per ounce in Thursday trades, while bitcoin fell as much as six % to $US10,455.

The two gold and bitcoin have recently been bid up by investors worried about the expanding balance sheet of the US Fed and its the latest policy overhaul that will probably lead to higher levels of inflation.

Very last month, gold touched all time highs at $US2,089 an ounce, while bitcoin arrive at a multi year high of $US12,473.

Investors typically look to both gold and bitcoin as a hedge to inflation, deflation, and dropping stock prices because of their historically low correlation to equities.

But that historical correlation did not play out on Thursday.

A traditional asset type which did give protection to investors from Thursday’s market sell-off was bonds. The Bloomberg Barclay’s US Aggregate Bond Index traded up almost as 0.20 %.

For all of the conversation among Wall Street analysts that the favorite 60-40 investment profile that balances stocks & bonds is actually “dead,” it is alive and nicely today.