Sunday evening
December 18, 2022
Hello everyone,
We’re now in the final week before Christmas. The silly season is well and truly underway.
Got up early this morning and watched the World Cup final between France and Argentina. What an amazing game!
Did anyone in Australia brave the wee hours to watch it?
Equities could be in for more pain in early 2023.
BlackRock (BLK) team doesn’t believe equities are fully priced for recession. Corporate earnings expectations have yet to fully reflect even a modest recession, said Vice Chairman Philipp Hildebrand of BlackRock. The Fed has promised it would continue to raise interest rates to rein in inflation in 2023 if necessary. BlackRock analysts have warned that the strategy of “buying the dip” won’t work in this new economic environment. BlackRock believes this macro volatility will be with us for some time. They don’t see a return to conditions that will sustain a joint bull market in stocks and bonds of the kind we experienced in the prior decade.
What to do if a recession happens?
A stock fund or a mutual fund is a great way to invest during a recession. A fund tends to be less volatile than a portfolio of a few stocks. And a stock fund offers the potential for high long-term returns if you can stomach the short-term volatility. Well diversified funds are a good option for investors who don’t want the hassle and risks of investing in individual stocks. One sound choice is an index fund based on the Standard & Poor’s 500, a well-balanced index that includes hundreds of America’s best companies and has returned about 10% over time. Rather than trying to pick the winners, you own a piece of the market.
If you want a portfolio that may be somewhat less volatile, you could add some dividend stocks. High-quality dividend stocks tend to fluctuate less than other kinds of stocks, meaning your portfolio will bounce around less. Plus, they can offer a cash dividend that ensures you’re getting some income while you’re waiting for the market to turn. If you don’t want to buy individual stocks, you could buy a dividend stock fund and enjoy the reduced risk that comes with diversification and still enjoy a solid dividend yield.
Real estate can be an attractive investment during a recession. You may be able to buy it at a cheaper rate. You also may be able to get a much better mortgage rate.
You could put your funds in a high-yield savings account. Just make sure that inflation doesn’t eat away at your money.
It is important to stay focused on your long-term plan and the better days ahead once the market turns back around. Work to keep your emotions from driving your decision-making in whatever way works best for you.
Wishing you all a wonderful week.
Cheers,
Jacque
"It’s never too late to be what you might’ve been." - George Eliot
