Good Question: Who Makes Money When The Dow Drops?
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MINNEAPOLIS (WCCO) – The Dow dropped more than 600 points Monday, making the plunge the biggest dip in the market since the 2008 financial crisis.
However, the drop isn’t bad news for everyone. Some are making money in the bad market, but who are they?
Mark Mekler, the senior vice president of investments at Raymond James and Associates, says that the only people who made money on a day like Monday were institutions that hedged their investments.
“There are short sellers and there are those who use options and other strategies to hedge their portfolios,” Meckler said.
In other words, investors who prepared last week by shorting the market, or anticipated a drop in stock prices, were right on target and were raking in the money.
But for every seller, there’s a buyer.
If the market bounces back, it doesn’t take a rocket scientist to know if you bought Monday you’ll benefit later.
So Brokers, people who sold stocks hoping the market would fall and anyone who traded in gold made money.
Meckler says having a financial plan and sticking to that plan is the best thing you can do during stressful economic times.
He says not having a plan is like sticking your cash in a coffee can and putting it in a hole in the backyard.