There’s a “hurricane” coming for the U.S. economy, and investors should brace themselves for more volatility.
At least that’s what JPMorgan Chase CEO Jamie Dimon said earlier this month at an annual conference sponsored by AllianceBernstein. Dimon, often considered the voice of the banking industry, is just one of many Wall Street titans painting a less-than-rosy economic picture.
From hedge fund billionaire Leon Cooperman to Morgan Stanley’s CEO James Gorman, bearish predictions about a continued economic downturn, or even an outright recession, have flooded headlines in recent months.
That’s not exactly surprising given the macroeconomic woes facing the nation. Rising consumer prices continue to be a thorn in the side of the Federal Reserve, with inflation hitting a fresh four-decade high in May despite multiple interest rate hikes. The war in Ukraine is wreaking havoc on global commodities markets, pushing the prices of food and fuel to unsustainable levels worldwide. And now, there are worrying signs of a slowdown in U.S. consumer spending, after retail sales unexpectedly fell last month.
All of these bearish economic indicators and recession predictions have consumers and economists spooked, too. More than 80% of Americans believe a recession will hit this year, and 70% of leading economists polled by the Financial Times last week said they expect a recession by the end of 2023.
On top of that, the S&P 500 is now down more than 23% since the start of the year after officially entering a bear market this week.
For stock market investors, these are trying times, to say the least. But it’s important to remember that bear markets aren’t the end of the world. In fact, they’re a normal part of how the stock market operates.
From the end of World War II through last year, the S&P 500 has experienced 14 official bear markets, or one every 5.4 years on average. The most successful investors understand that bear markets can be navigated without panic, and may even present opportunities.
Here’s what several top investment advisors and wealth managers recommend investors do to avoid major losses and make it through this year’s bear market.
Stick to a long-term investment plan that fits your goals
The first and most important tip for any investor looking to weather a bear market is to stick to a long-term investment plan.
“Assuming that a client has a well-thought-out investment plan that is consistent with their goals, objectives, time horizon, and risk tolerance, they should stay the course,” Gerald Goldberg, CEO and co-founder of the investment …….