- In spite of Thursday’s stock market plunge, non-traditional and traditional hedges like yellow and bitcoin weren’t immune from the sell-off.
- Technology 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 almost as 1 %, while bitcoin fell 6 % on Thursday.
- Typically, investors appear to these non-traditional assets to provide shelter during stock market sell-offs.
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Technological innovation stocks led the marketplace decline, with the Nasdaq hundred index down as much as 6 %. Mega-cap tech winners as Apple, Amazon, and Microsoft fell eight %, 7 %, along with six % respectively.
Meanwhile, the S&P 500 fell almost as four %, while the Dow Jones industrial average fell over 1,000 aspects for a loss of three %.
The high technology driven sell off in the stock market spread to non-traditional and traditional collection hedges like bitcoin and gold.
Gold fell almost as 1 % to $US1,927.20 per ounce in Thursday trades, while bitcoin fell almost as 6 % to $US10,455.
The two gold and bitcoin have just recently been bid up by investors worried about the expanding balance sheet of the US Fed and its recent policy overhaul which will probably result in higher levels of inflation.
Very last month, gold touched all-time highs at $US2,089 an ounce, while bitcoin hit a multi year high of $US12,473.
Investors often look to both gold as well as bitcoin as a hedge to inflation, deflation, and decreasing stock prices due to their historically low correlation to equities.
But that historical correlation did not play out on Thursday.
One classic asset category which did give protection to investors from Thursday’s market sell off was bonds. The Bloomberg Barclay’s US Aggregate Bond Index traded up pretty much as 0.20 %.
For all the conversation among Wall Street analysts that the popular 60-40 investment portfolio which balances stocks & bonds is “dead,” it’s alive and well today.