It’s no exaggeration to say that 2022 has been a tough year for investors. From a stock market perspective, the year started volatile. Stocks managed to rise a bit over the summer, but that rise was followed by another drop as fears of inflation, rising interest rates, and a recession all came to a head.
In a recent podcast, financial guru Suze Oman emphasized that the stock market is not actually in recovery mode. Her stock may have been showing signs of recovery when she made that statement. But Orman doesn’t want investors to let their guard down. As such, it’s important to be realistic about the fact that stocks can continue to fluctuate for significant periods of time.
We could be in turmoil for many more months
There are several reasons why the stock market is driving investors out of control. Economic news tends to influence stock market movements, so when there is a lot of uncertainty, stock prices can fall.
In the meantime, we are working through rather uncertain times. Not only is inflation still soaring, but aggressive interest rate hikes by the Federal Reserve are fueling fears of a recession. In fact, some financial experts have argued that the United States could face prolonged economic instability. And that’s the kind of news that could drive investors to sell their shares, thereby leading to a drop in price.
what to do now with portfolio
Clearly, the stock market isn’t very stable these days. However, it is important to act rationally as an investor in light of this.
If your brokerage account is experiencing losses, don’t panic. You are never alone in that regard.If you leave your portfolio alone, you can easily recoup all of the lost value over time.But if you worry about further losses and start selling stocks , the situation tends to worsen.
At the same time, now is a good time to look at the portfolio and make sure it is wonderfully diverse. This is because if that sector takes a hit, the balance may decrease more than necessary.
if you that is If you’ve invested too much in one segment of the market, consider making a few trades. Dumping some stocks in that segment could mean locking in losses, but conversely, you might be able to replace those stocks with discounted stocks in another segment.
When will things improve?
This question is really hard to answer. If inflation starts to subside and recession fears fade, the stock market could start to calm down. But you never know when that will happen. And unfortunately, we may have to endure an actual recession first before this wave of stock market turmoil is over.
This can be a difficult pill to swallow as an investor. But it’s important to be realistic about the situation. In addition to having a diversified portfolio, make sure your emergency fund is in good standing, as it can take quite some time for the stock market to recover, says Orman. please. The last thing you want to do is use your portfolio when stocks are falling because you need money and you’ve run out of savings accounts.
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