Author of How to Prep When You’re Broke and Bloom Where You’re Planted online course
Some folks are calling August 5, 2024 “Black Monday 2.0.” It could be remembered as the day when the global market crash began in earnest.
The following should not be considered financial advice. If you are looking for financial advice, I recommend speaking to an expert who is not vested in the stock market system. I’m just explaining what has been explained to me in the clearest way possible.
Some background on the global market crash
While we in America were still sleeping, in Japan, the stock market there was crashing. Traders has been borrowing against the yen at 0% and investing that money elsewhere. Then, rates went up. Suddenly they were upside down in their investments, which means they owed more than the investments were worth. Stocks fell further and further throughout the day. The Japanese market, the Nikkei, crashed 4,451.28 points – its largest-ever loss in terms of points.
It didn’t take long for the carnage to spread across Asia. South Korea and Taiwan also hit historic lows.
European markets experienced six month lows, and by the time we woke up here in America, our own stock market opened 1000 points down from Friday. Meanwhile, many of the top American brokerages suffered digital “outages” on Monday, which means that regular folks couldn’t access their investments and make changes. The accounts were completely inaccessible for the day, but were back to normal on Tuesday. The brokerages blamed the outages on “technical difficulties.”
Sure.
In other Monday news, the tech sector, particularly the “Magnificent Seven” (Alphabet/Google, Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla) all saw a plunge in value, with a slight recovery later in the day. All in all, these tech stocks lost $653 billion on Monday. But this closely follows a $744 billion decline on July 24, so it’s not good news. Before you go start a joint Go-Fund-Me for Bezos and Zuckerberg, rest assured, they still have plenty of money. It’s the folks whose retirement funds are invested into Big Tech who need to worry.
There are other factors in play here: a bad jobs report on Friday (they can’t hide the truth forever), Google was declared a monopoly by courts, people are beginning to doubt whether there’s any money in AI, and Warren Buffet’s decision to cut his Apple holdings in half. Fears of a recession are greater than ever.
Bitcoin, long considered a safe haven, also fell on Monday, losing 15% of its value. Ethereum, another cryptocurrency, lost 22%. BNB, Solana, Dogecoin, XRP, Shiba Inu, and Cardano are all down between 16% and 18%.
How does this affect us normies?
These companies are overvalued – so it’s not really shocking that these drops occurred. It’s all about how much they are really worth vs. how much people will pay.
But here’s how it affects us directly.
First, if you are invested in the market and happen to be into any of these companies that had substantial drops, you are watching your investment dollars disappear right before your very eyes. For example, if you had 1 Bitcoin worth around $73,000 in March, your Bitcoin on Monday would be worth around $51,000. Multiply and subtract as is applicable to your situation. It’s likely that things will go back up (they call this a dead cat bounce), only to fall yet again.
This means that folks who are depending on their investments for retirement may be looking at a far more lean future than they expected.
But what if you aren’t invested in the stock market? Should you care?
Absolutely.
A crash in the market affects our economy broadly and some of it is purely psychological. If you have no confidence in our economy, are you going to spend as much money? Are you going to invest in these companies that are plummeting in value? Of course not. You’re going to become far more conservative with your money.
This, in turn, means that the retail sector suffers, and then employment suffers as jobs are cut in response to the slowdown. Then, the prices of things go higher as retailers try to make up their losses. The same is true with service industries. Are you really going to go get your nails done or go to the spa when you’re pinching pennies?
It may become more difficult to get loans and if you do get them, you may pay higher interest.
All this leads to an economic recession, which can eventually (or even suddenly) lead to an economic depression. We’ve seen all this before.
What can you do?
Again – this isn’t financial advice. You should speak to an expert for that.
There are a few things you can do to ride out the storm.
Invest in needs.
First things first, make sure you are well-stocked with shelf-stable food, incidental needs, and, if you can afford it, land. Learn skills that help you produce the things you need or repair the things you have.
Get as financially stable as you can.
If you’re able to become debt-free or remain debt-free, that will take you a long way toward future financial security. Get your budget to a level you can afford on a portion of your salary as opposed to spending every dime and living paycheck to paycheck. Take care of any medical or dental issues now, while you still can afford to do so.
Rethink investing and savings.
Finally, once you have the other things handled, it’s time to focus on the bigger picture. A lot of folks make the mistake of thinking they should be hoarding gold and silver like a dragon, but this doesn’t come until after you’ve covered the basics. Once your preps are in order, your debts are paid off, and your home, vehicle, and family are maintained, then it’s time to put some money back for later when the crisis is over.
The purpose behind stocking up on precious metals is that gold and silver will hold their value when the dollar may not. After the economic disaster is over and our society is beginning to recover, precious metals will have value regardless of what has happened to the dollar. Even if we have moved on to an entirely different currency by then, whether or not the dollar is still the reserve currency of the world, or whether we have turned into a cashless society, the value of a precious metal remains consistent. When you need to make a payment on your property taxes or some other expense, you can convert precious metals to whatever the currency is, at whatever value the currency has at that time.
A lot depends on how you personally want to do it. If you are thinking that gold might be an important bribe, a suggestion from Selco is to buy a lot of plain gold wedding rings. You can slip one of those off your finger to offer a guard or other person you might be bribing, and nobody will expect that you have six more just like it. It will seem like it’s probably the only thing you have. I have followed this advice and often hit up pawn shops to check out their bands. I’ve also gotten some good pieces from yard sales mixed in with bags of “costume” jewelry.
While jewelry is one way to purchase precious metals, buying bullion or coins may be the best method. This is how governments and central banks create their reserves. Bullion is gold and silver that is at least 99.5% and 99.9% pure and is in the form of bars or ingots. This medium is ideal because of its purity, set weight, and recognizability. I purchase all of my solid gold and silver this way from ITM Trading. They actually offer a completely free strategy session if this is something you’re considering. I strongly suggest you set up a call – you’re under no obligation to buy. But the information you receive may make it some of the most valuable financial education you ever get, particularly given that our banking industry is in such dire straits.
Metals are a unit of storage.
Just to be clear, gold and silver pieces are stores of personal savings. They aren’t emergency funds, nor are they generally easy to spend. (There are some exceptions, and I’m generalizing here.) This is for money that you do not need immediate access to, although you can liquidate them reasonably easily today. This investment is made so that when things finally settle down after the current economic crisis, you still have wealth, and it hasn’t all dissolved or dwindled in value like money in the bank can do.
Has the global market crash affected you yet?
Were you affected by Monday’s dismal numbers? Are you concerned about the future of our economy? Do you think this is only the beginning? Are you taking any steps to prepare?
Let’s discuss it in the comments section.
About Daisy
Daisy Luther is a coffee-swigging, adventure-seeking, globe-trotting blogger. She is the founder and publisher of three websites. 1) The Organic Prepper, which is about current events, preparedness, self-reliance, and the pursuit of liberty; 2) The Frugalite, a website with thrifty tips and solutions to help people get a handle on their personal finances without feeling deprived; and 3) PreppersDailyNews.com, an aggregate site where you can find links to all the most important news for those who wish to be prepared. Her work is widely republished across alternative media and she has appeared in many interviews.
Daisy is the best-selling author of 5 traditionally published books, 12 self-published books, and runs a small digital publishing company with PDF guides, printables, and courses at SelfRelianceand Survival.com You can find her on Facebook, Pinterest, Gab, MeWe, Parler, Instagram, and Twitter.
I pulled all my 401k’s n Roth Iras over the past 3 years. Pulled the last 1 in March this year. I took that 25% tax hit for pulling early like a champ. I talked to Brandan over at ITM trading and he has been my precious metal advisor for over 3 years. My neighbors just invested $100,000 cash in the market in January. I tried to show them all the videos Brandan sent me but they refused to watch them. Only wanted to sit around and drink. My other neighbors are freaking out and finally realizing that shtf is coming soon, and they’re not prepared. I’m watching everyone around me , n being the gray man as Selco suggests. I have cut down every expense I can, use techniques from the frugalite website, as well as working massive overtime to pay off debt a Lil quicker.
Pretty sure we’ve been hit from the market a bit. I don’t even want to know how hard just yet. Hubby will be 59 1/2 next year so we can’t pull anything out until then.
We plan to pull out a substantial amount before he pulls the plug on his job full time so we aren’t paying taxes on that extra amount at the same time. IF the market lasts that long. 😉
El Rancho Am Broko. Small town life. Just old as the hills, and poor as a circuit-riding preacher (for those of you who know what that is). Have never invested in the stock market. Don’t have any plans to start now. Precious metals…. what’s that? Whatever happens financially will happen, and there isn’t a thing I can do about it. Got food, ways to prepare it, know-how, guns and ammo. When the shtf I’ll just hunker down with her majesty and try to protect us as best I can. Kids are all on their own, scattered out. Only one of them is not prepped-up. Prepared for life after. No worries. Y’all keep the head-swivel well oiled. Hang on.
Be blessed by the Creator,
OD
Oh, gimmee a break. There’s plenty you can do about it–and you are already doing it. One more thing–prepare to rebuild society after disasters by joining CSPOA and getting to know your neighbors.
When he said “Whatever happens financially will happen, and there isn’t a thing I can do about it.”, I think he meant the big picture: world markets, the economy, the stock market, etc. And if that’s what he meant, he’s right, there’s nothing that any of us can do about the big picture besides pray, and I have no idea what to pray for, except that God’s will be done.
And yes, we all need to be ready to do what we can to help rebuild society if that happens, but many of us who read OP are older. I haven’t noticed our opinions being listened to a whole lot by the whippersnappers.
I have a friend who owns a farm who raises his animals primarily on the grass that he grows for them. He and his wife work hard at running their own businesses and raising their own food both vegetable and animal. They butcher their cows and pigs at a USDA-regulated facility and butcher their own chickens. They then sell what they grow at the local market and are phasing out a lot of the work they do outside the area to focus more on the needs of the local community. They built up their businesses using the capital that they had and at the same time looking for the best opportunities that they could find.
Last year, when other farmers were facing issues regarding high grain prices and the price of meat was through the roof, his business thrived because his expenses didn’t increase like those of other farmers nearby. He also didn’t have to increase his prices because his bottom line didn’t increase. Plus he gained numerous customers because he could offer a better product for a more reasonable price.
Not all of us need to be farmers. However, I learned from them that developing and maintaining a diverse local economy is what we all should be doing. Like you said, get control of your finances. If you have a job, find a side hustle that you love that will help you make it through hard times. Learn frugal ways that keep more of the money that you make in your own pocket. Buy a home, put in a garden and an orchard, raise at least some of your livestock. Produce at least some of the energy that you use. Avoid buying new if possible. Learn cheaper, more natural ways of doing things. Batch errands. Put off purchases. Every day find some way to increase your independence. After all, that is the American Way.
“How does this affect us normies?”
Preppers aren’t normies. And that is a good thing!
Yep, the market was overvalued.
I was expecting a correction, but not this soon.
Was it the poor jobs report?
Or meeting that definition of being in a recession?
Who knows.
Things are likely going to get worse before they get better, more so than now.
The situation in the Mid-East, the Ukraine and Russia war, lot of things lining up to go from bad to worse.
I realize that the shit is hitting the fan but all I’ve been able to afford is extra food, water, Ecoflow power stations, rechargeable lanterns and fans. I also bought 2 solar panels and extra Rx by using the Good Rx card n bypassing my insurance. After that, the hair will go with the hide. I have a strong faith and know that God will intervene but we must pray like our lives depend on it because it does.
“Get as financially stable as you can. ” is good advice Daisy. Thank You.
US Treasury bills are another safe place to put your money and get 5% interest which is much better than what banks pay.
These are volatile times. And the lunatics are running the world. But this is an election year and the puppet masters want their puppet show to go on and get the female version of the Biden puppet elected. So the Fed at some point will step in to try and save the day. But this Yen carry trade crisis is a big unknown. They’ve dropped a flare down this financial hole and they have lost sight of it. So beware of the stock market if you feel like buying stocks at these bargain low prices. Too many unknowns here.
The market dropped because of the Yen carry trade margin calls. Then investors panicked and sold into the drop. I have read estimates in the billions to 1 trillion dollars were called. Big money got caught with their pants down.