Another day, another stock market sell-off.
Even though the stock market has been on an incredible, multi-year run, breaking new record highs on a daily basis (up until now, #sad!), it’s not as much fun or exciting when you watch today’s 666 point decline – even if percentage wise, it’s not so bad – as when you look at your retirement accounts going up every day.
Since Friday, the US and global stock markets have been savagely whipsawing back and forth with triple-digit advances and declines. Since the Dow Jones Average, the generally accepted bellwether for the stock market, was over 25,000 points, the numbers involved in the ups and downs seem frighteningly large. Also, the seemingly schizophrenic swings are reminiscent of trading before the financial crisis. While the pundits and so-called experts claim that the economy and fundamentals are solid, it easy to get nervous.
What gets me concerned is that when markets are volatile, coupled with the ever-present angst and drama over politics, and possible nuclear annihilation with wars with North Korea and Russia, compounded by the profound sadness of football season being over, it’s easy for companies to tap the breaks on hiring.
In my 20 years of experience as an Executive Recruiter, I have noticed that corporations are more apt to hire when they are confident about the economy and the optimistic possibilities of growth opportunities. Conversely, when there is fear in the air, they tend to pull back due to the uncertainly of the future. In particular, within the banking, finance and Wall Street space that we recruit, banks will most likely focus on what these dramatic moves mean to their core business and whether or not they should be concerned. Hiring someone into drama is never deemed a good idea for timid executive management.
Also, much has been written about the “volatility” products offered by financial firms that seemed to go awry contributing to the chaotic market. Algorithmic computer generated trading exacerbated the wild swings too. Both institutional and retail investors, feeling helpless, lost, confused, and afraid to see their 401ks (retail investors) destroyed, like it happened in the financial crisis, may sell their holding to avoid their investments becoming 201Ks. Institutional money managers may sell to protect their winnings (and potential bonuses based upon their investment performance). Hiring could easily be placed on hold until managers at the banks figure out what went wrong, who f*%d-up, how they could blame someone else for their problems, and then profit from the carnage.
Speaking of profiting from disasters, maybe the executives at our regulatory agencies will one day wake-up and realize that there are a lot questionable products being bought, sold and traded that nobody really understands, and are time bombs in the making. Perhaps instead of deregulation, we hire back the Senior-level Compliance andrelated professionals that were shown the door, and stop moving people, in cost cutting measures, to certain states and countries just to find cheap inexperienced labor – who won’t be able to spot problems due to their lack of experience (which is not their fault). With the take-over of trading by computers, allowing junior untested millennial traders who never experienced a market downturn run the show (since the seasoned trading veterans were already fired), displacing and downsizing well-trained Compliance and regulatory personnel, we are allowing landmines to spread all over the place, which will eventually blow-up in the future.