With a Potential Recession Looming in 2023 — Should You Sell Your Stocks Now?
Key takeaways
- The March banking crisis, sticky inflation and recovering housing prices have worsened economic outlook
- Federal Open Market Committee predicted a mild recession later this year
- Best plan for your portfolio is to adopt a recession investing strategy with a long-term view
Is a recession happening? While encouraging economic data and headline inflation now under 5% in the US for the first time in two years, things have been looking good. Unfortunately, some longer-term factors could tip the US economy into a recession. Let’s look at those now.
Get your portfolio ahead of recession fears with Q.ai’s Recession Resistance Kit. The secret ingredient is an AI algorithm that does the heavy lifting for you by scanning the data sources, finding the recession-proof stocks set to perform, and readjusting the holdings accordingly. It’s all with the aim of helping you build wealth without the upfront work.
Download Q.ai today for access to AI-powered investment strategies.
Is a recession likely?
If we take the debt-ceiling drama out of the equation and look at the data, we can see job openings are trending downwards and unemployment is rising. Headline CPI came in at 4.9% for April, which was the tenth decline since its peak in the summer of 2022.
However, the March banking crisis and the persistently high housing market prices have increased the chances of a recession. Statista puts the projected monthly probability of a recession in the US by the time we reach 2024 at 68%.
The Federal Open Market Committee (FOMC) has predicted a mild recession in 2023 and the Bank of America echoed the same sentiment earlier this year. So, chances are, we could be heading for one unless the data dramatically improves.
Should you sell your stocks now?
If a recession hits, then the value of your portfolio will likely decrease. But as long as you have a diversified portfolio, there’s no reason to exit the market en masse. Avoiding any knee-jerk reactions to the market diving is hard to resist, yet vital if you want to take advantage of any potential surges that come with a downturn.
The key to a recession investing strategy is two-fold: taking a long-term approach to your portfolio and diversifying into ‘recession-proof’ stocks. The former means understanding that every market goes through peaks and troughs, and the light at the end of the tunnel could be sooner than you think in a bad economy.
As for recession-proof stocks, look for solid companies with smaller, yet steady returns which are in sectors like utilities and consumer staples. A healthy business will survive a downturn, so researching the company’s balance sheet — or having AI do it for you — is always a smart move in a recession investing strategy.
The bottom line
A recession is looking increasingly likely as the US grapples with sticky inflation, housing prices and the regional banks still recovering from the March crash. The best way to handle it for your portfolio isn’t to make sudden moves but instead to keep calm and carry on.
Higher inflation is one of the economic pressures that’s fuelling fears of a recession. Harness the power of AI to keep your portfolio afloat with the Inflation Protection Kit. The AI sifts through the data to find the ETFs, commodities and stocks matching or outperforming inflation, then updates the Kit’s holdings to help your investment grow.
Download Q.ai today for access to AI-powered investment strategies.
