- In spite of Thursday’s stock market plunge, traditional and non-traditional hedges like gold and bitcoin weren’t immune from the sell-off.
- Technological innovation stocks led a steep sell off of the industry, with the Nasdaq 100 index down pretty much as 5.5 % in Thursday afternoon trades.
- Gold traded down as much as 1 %, while bitcoin fell 6 % on Thursday.
- Often, investors appear to these non traditional assets to provide shield during stock market sell-offs.
Engineering stocks led the market decline, with the Nasdaq 100 index down as much as six %. Mega-cap tech winners as Apple, Amazon, and Microsoft fell eight %, 7 %, and six % respectively.
Meanwhile, the S&P 500 fell almost as 4 %, while the Dow Jones industrial average fell more than 1,000 points for a loss of 3 %.
The high technology driven sell off in the stock market spread to traditional and non-traditional portfolio hedges like bitcoin and orange.
Each of those gold and bitcoin have recently been bid up by investors anxious about the developing balance sheet of the US Fed and its recent policy overhaul that will probably lead to increased levels of inflation.
Very last month, gold touched all time highs during $US2,089 an ounce, while bitcoin hit a multi year high of $US12,473.
But that historical correlation did not play out on Thursday.
A conventional asset type which did provide protection to investors from Thursday’s advertise sell-off was bonds. The Bloomberg Barclay’s US Aggregate Bond Index traded up as much as 0.20 %.
For all the conversation with Wall Street analysts that the favorite 60-40 investment profile which balances stocks & bonds is “dead,” it’s alive and perfectly today.