Diary(opinion?) 4/30

I took an online English lesson, but I couldn't explain my opinion regarding the stock market.
I've written it down so I upload.
It's not diary though...

Just in case, it is just "my" opinion.

Question 1

The stock market price was high, but gradually began to decrease before covid-19. Why?

Because the market was good time before the Coronavirus. I think the boom market was caused by each countries financial policy and investor's anticipations.

Generally speaking, I think there are two factors for increasing stock price.

First factor is the money supply by the central bank and investors. Second factor is low interest rate.

The central bank of each country supply much money in order to keep the market good status. Every country’s central bank buy assets from market, then the stock price is increasing more and more. Investors see the market situation, and think the market is good. Then the investors buy stock more and more. Afterword the market price is keep higher.

Interest rate is also cause good market. When the interest rate is low, companies can borrow money easily. So companies borrow money and do their business more and more. Individuals also get money easily from bank. When the interest rate is low, they borrow money to buy houses, cars, and so on.

However, some people get anxious when the price is too much higher. They begin to be suspicious whether the price is real or not.

Market price is effected by the investors demand, but sometimes, the stock price is not reflected the real status of the companies. Ideally, stock market should be reflected by the companie’s real financial status. However too much boom market cause that the market price exceed the intrinsic/fundamental value. This market status is called “bubble economy”

Before Coronavirus pandemic, some people began to be doubt the economy is bubble economy. Though the price was still high, the speed of market growth was getting to slow down. Therefore, some companies stock began to decrease.

Question 2

Why the stock price decrease after pandemic?

First of all, just before the pandemic, the oil price was getting to decrease. This was because the suppler decided that they will increase the amount of the oil production. Saudi Arabia and Russia decided to increase.

The more oil they product, the less price is.

So the oil price began to decrease just before the pandemic. And this began to effect oil companies’ stock price. Oil price decreasing effects to the oil companies’ profit so that investors got to sell the companies’ stock.

Afterword, the virus spread all over the world. As you know, many country urged citizens to stay at home. If they don’t go out, they don’t use money. If they don’t use money, many companies’ profit should go down. Especially, it hit the retails, restaurants, amusements companies. Investors anticipate the decreasing companies’ profit, then they started to sell companies’ stock.

Additionally, people stay at home will also effect the oil consumption amount. Though the suppliers decided to produce oil more, the consumption amount will go down. The oil price was decreasing less and less. In the mid of April, the future oil price was negative.

If the situation continue for a long time, all the companies profit go down less and less. Many investors are anxious about the recession.