The Dow Jones Industrial Average has dropped almost 2000 points since Thursday. The S&P500 is down 12.1% on the year.
Are There More Losses to Come?
Based on the last three recessions and the current economic trends, yes, there could be more pain to come. The S&P500 dropped about 38% in one month in 2020. The Dow Jones Industrial Average dropped 55% in the Great Recession. The NASDAQ Composite Index plunged up to 78% in the Dot Com Recession.
Source: MSN.com. (c) Microsoft.
Are We in a Recession?
Not yet. However, experts, including Goldman Sachs, have put the possibility of a recession in the next two years at 35-40%.
Should We Just Buy and Hold?
That worked pretty well in the pandemic. However, that was an anomaly. The U.S. had a debt ceiling suspension which allowed the Treasury Department to print up $5 trillion and give away free money to a lot of people, and pad corporate coffers with cash. On September 30, 2019, U.S. public debt was $22.7 trillion. By September 30, 2021, the public debt had soared to $28.4 trillion. As of April 25, 2022, public debt was at $30.4 trillion, with a cap of $31.4 trillion. That limits the ability of the Treasury to send out “Stimmy” checks to keep stocks and bonds artificially buoyant.
Borrowing rates were historically low during the pandemic. With interest rates rising, high debt levels, elevated asset prices, inflation, war, expensive gasoline and an inverted yield curve, there are many signals that a recession is on its way. Recessions are usually preceded by stock market downturns. You can check out my blog “Risks of a Recession in 6 Charts” for additional data and information.
Buy and Hold investors had to wait 15 years for the NASDAQ to crawl back to even. During the Great Recession the wait time while your wealth was underwater was almost 6 years. Riding that kind of Wall Street roller coaster, and using the bull market to crawl back to even, can be disastrous. It tanks your credit score, drains your liquidity and could cost you your home.
How Can You Protect Yourself?
Below are just a few important things to take action on now, with regard to your nest egg (your liquid assets).
If you aren’t sure how to ensure that a Wealth Protection Plan is in place, then consider some of the tools below to help.
How Can You Be the Boss of Your Money?
If You Wait for the Headlines, It Will Be Too Late
It’s tempting to wait and see. However, if you wait for the headlines that the economy is in a recession, or to learn that the stock market has plunged by 50% or more, it’s too late to protect your wealth. You’ll then be in a position of having to hope and pray that you make up losses. So, now is the time to get educated, get protected, be the boss of your money and adopt time-proven, 21st Century strategies. (Again, Buy & Hope worked well in the last century, but has been a disaster in 21st Century recessions.)
Now is the time to know what you own and why.
If you'd like to learn 21st Century time-proven investing strategies to protect your wealth, or how to pick stocks from a No. 1 stock picker, join us for our June 10-12, 2022 retreat. Email info@NataliePace.com or call 310-430-2397 to learn more and to register. Click on the banner ad below to discover the 18+ strategies you'll learn and master.
Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The Power of 8 Billion: It's Up to Us and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 5th edition of The ABCs of Money was released on September 17, 2021.
Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden.
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Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.
ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.
Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.
Natalie Pace is the co-creator of the Earth Gratitude Project and the author of The ABCs of Money, The ABCs of Money for College, The Gratitude Game and Put Your Money Where Your Heart Is. She blogs on Huffington Post and Medium, and is a frequent guest contributor to national news shows and magazines. She has been ranked the No. 1 stock picker, above over 830 A-list pundits, by an independent tracking agency, and has been saving homes and nest eggs since 1999.