For 200+ years, pension, insurance, and other such funds have invested their cash in Treasury Bonds. The, say, 5, 10, 15% face value meant that regardless of interest rate drops or hikes, they received $5,000, $10,000 or $15,000 etc., each year on each $100,000 Treasury Bond like clockwork. This easily paid for all administrative costs and gave them a built-in profit.
This continued until 2008. Then, when Lehman Brothers collapsed, interest rates dived to 0.5% or even to zero. This meant that for each $100,000 bond, the pension, insurance etc.. funds would make $500 or less on each bond, barely covering the cost of the clerk writing it down.
So, as each 5%, 10% and 15% Treasury Bond expired and the Pension plan, Insurance company or other such fund were handed back their $100,000 initial investment, they could not reinvest it in bonds profitably given the historic low interest rates. So, for the first time in about 200+ years they had to invest elsewhere, in stocks and in real estate, directly or, more usually indirectly.
Over the last decade, institutional money had steadily poured out of Treasury Bonds and into real estate and stocks, causing both the Dow-Jones etc and real estate prices to soar through the stratosphere.
BUT, Treasury Bonds have a 10 YEAR EXPIRY. So, after 10 years, ALL of the, say, 5%, 10% 15% bonds will have expired and all that money returned to the institutions. For stocks and real estate, that means "the tap is turned off" and the seemingly endless flood of cash hitting real estate and the stock markets shut off.
The interest rates cuts due to Lehman Brothers collapse took place on 8th October 2008.
That means that the world's stock markets are no longer underpinned with cash from Treasury Bond outflows from 8th October 2018 onward.
THAT is one big reason we saw a sort of sell-off in the US Stock market yesterday, October 10, 2018. The Dow Jones Industrials dropped 831 points.
Overnight, markets in Tokyo (Nikkei) and China (Hang Seng) also saw similar drops.
Today, markets in Europe are likely to see this same type of action as well.
This is nothing more than a blip on the radar screen. The key for average Americans is to NOT PANIC.
Remember, back in February, the market dropped something like 3,000 points during the month. It was no big deal and the market recovered just fine.
There are other reasons for the stock drops taking place; political reasons.
The New World Order globalists have tried for two years to stop President Donald Trump. Everything they have tried, failed.
Even last week, their effort to wreck the nomination of Supreme Court Justice Brett Kavanaugh failed.
The leftist, liberal, progressives, et. al. have nothing left in their political arsenal to prevent the complete collapse of their decades of work toward a new world order and one world government. They are utterly desperate to cling to power and the only thing they have left to utilize is the financial system wherein they possess SOME power, but not enough.
The leftist, liberal, progressives WANT to cause panic. They WANT to cause a financial meltdown before the 2018 Mid Term elections just 27 days from now. They believe that if they cause a major financial crisis, Trump will be blamed and they can win election to the US House and Senate.
So they are MANIPULATING markets to CAUSE a "crisis." If WE panic, THEY win.
Think about this for a moment: If the downward stock market was actually a harbinger of coming crash, we would see companies like Facebook, Alphabet (Google), Netflix and others announcing tens of thousands of layoffs. We would see CEO's from major corporatinos, banks and stock brokerages, jumping off the roofs of skyscrapers, plunging to their deaths because their financial world was being wiped out. WE DON'T SEE ANY OF THAT!
Until we see sudden layoffs of tens of thousands, accompanied by suicides of big name CEO's, then the entire Stock Market downturn is nothing more than a grotesque manipulation timed to coincide with the mid-term elections. More bluntly, the market downturn is a fraud.
Now, I am not a licensed financial or stock expert and I cannot give financial or stock advise. You should consult with a licensed expert before undertaking any activities involving stocks, bonds or other financial matters.
I can, however, comment on my personal perceptions of what is presently taking place, and THAT is exactly what I am doing here.
Gee, a stock market meltdown just 27 days before the midterm elections . . . what a coincidence.
Naaaaahhhhhhh. Manipulation. Don't buy it. They're trying to get their globalist pals back into power in the US Congress.
You don't give matches to an arsonist. And you don't give power to an angry mob. That is what the leftist, liberal, progressives (Democrats) have become: an angry mob. They have become too extreme and too dangerous to govern. How they treated Brett Kavanaugh is proof. What's now being done with stock markets is more proof.
These people in the leftist, liberal, progressive, Democrat Party -- and their globalist pals -- are so extreme, they are now doing intentional economic damage to the country to try to get back into power. Don't fall for it, America.
Much of the selling yesterday and again today has been INSURANCE COMPANIES liquidating stocks to get cash to pay off claims from Hurricane Michael! The companies already know the claims for destroyed property will reach into the "tens of billions" and that is why they are freeing-up cash.