Experts say recession ‘could be on the horizon’
What steps financial experts say you should take as Dow drops 800 points.
WARWICK, R.I. (WLNE) — With the Dow dropping 809.28 points on Tuesday as Nasdaq fell 3.5%, legal experts warn a recession could be on the way.
“I mean, one thing to remember with a recession: it’s a matter of when, not if,” said Jason Moser, senior Analyst at The Motley Fool. “There is reason to believe that a recession is on the horizon.”
Although the figures are frightening, Moser warns it’s not the time to take drastic action, although he acknowledges “understandable that some folks may want to run and hide.”
Yet, doing so could be harmful for long-term investments.
“We encourage folks to stay the course and continue doing that. Because really, right now your assets with long-term track record of appreciation, you’re getting them at a little bit of a discount now when the market behaves the way it’s behaving today,” said Moser.
It’s a mindset echoed by Jeffrey Massey, certified financial planner in Warwick who says the worst thing to do is panic.
“Don’t change your investments. That’s not the smart thing to do,” said Massey. “The smart thing is to buy more.”
But what caused Tuesday’s dramatic drop? Food shortages, inflation, and interest rates rising are just some of the factors experts say contributed.
“You’ve got interest rates causing volatility, balance sheet reductions causing volatility…and then the wildcard, Russia and Ukraine,” explained Massey.
To protect clients’ investments, experts like Moser and Massey recommend thinking about the future and paying attention to the present.
“Stocks traditionally perform worse one year prior to the actual recession,” explained Moser, who said recessions when in effect generally last about ten months.
To avoid falling victim to the recession, he recommends consumers prepare for a “rainy day.” “I would encourage folks to avoid getting back into that debt hole if they possibly can, and I always like going through and doing a little bit of a subscription audit.”
For investors, The Motley Fool analyst said drops like these are “opportunities” to buy stocks at a lower rate to place yourself in a prime position for when the market spikes back up.
For those concerned about their retirement, Massey said it’s something you’ll want to worry about if you plan to do so within the next decade.
“Within five years of retirement, in our opinion, you should really start dialing down your level of risk so you’re not so concerned about events like this past week,” he said.