It has not been a lucrative year for the stock market. The S&P has fallen for a whopping 10 weeks out of the past 11. The Dow closed below 30,000 for the first time since January 2021.
Article by Ty Flores from our premium news partners at The Epoch Times.
If we turn to historical data for insight into the future, things don’t look much more optimistic. According to Goldman Sachs strategist Vickie Chang, the S&P 500 has dropped below 15 percent a total of 17 times since 1950. On 11 of those occasions, the stock market bottomed out only when the Federal Reserve indicated it would loosen monetary policy.
As we currently head toward bear market territory, the Fed has given no indication of doing so. Indeed, the Fed plans to continue raising rates into 2023.
What does this mean for investors? For those investing in the S&P 500, their portfolios are worth the same now as they were in early 2021. Concurrently, inflation has continued to rise, further exacerbating any portfolio returns. This begs the question: as the markets continue their tumultuous behavior, what should you do?
Panic Helps No One
Panic rarely, if ever, improves a situation. Investing is no exception. It’s important to keep a level head and stay objective.
If you are working with an advisor, be direct with them. Ask about their plans for the future and find out how current events change things for them, if at all.
If you do your investing on your own, avoid being emotional and subjective in your decision-making. Certainly, the stock market is not great at present. However, any drastic decisions you make now could severely impact your portfolio, for the foreseeable future.
There is no single right or wrong answer. It all depends on the person and their situation. Regardless of the direction you decide to take, make sure your decision is a calculated one.
What Investment Stage Are You In?
There are different stages on everyone’s investment horizon. A young professional working at their first job out of college will be in a completely different ballpark than someone in their late fifties. When an economic downturn occurs, it is important to remember this.
If the S&P and other indices continue to fall, and with negative annual returns in the double digits, investors planning to access their money in the near future may want to consider more conservative strategies.
Let’s say you are planning on retiring in two years and your portfolio loses 20 percent for the year, dropping from $400,000 to $320,000. The stock market will almost certainly correct itself at some point. The question you should ask is whether it will do so in a suitable timeframe for you.
If you want to retire with at least $300,000 in your portfolio and you are still above that mark despite your losses, it may not be advantageous to continue investing in volatile funds so close to their distribution stage.
However, younger investors still in their accumulation stage—and not needing liquidity in the near future—can probably ride out this storm. What the younger crowd lacks in principal and prosperity from decades of compound interest is made up for by the decades still ahead of them. Their portfolios can take a hit and bounce back. There is plenty of time for them to meet their goals.
For those whose advisors are using Riskalyze, now would be an excellent time to reevaluate your risk tolerance with a risk assessment. To be clear, this is not a paid advertisement for Riskalyze. I recommend tools and strategies within my realm of experience. When I was an advisor, I worked for many years without this tool and for many years with it. I strongly preferred the latter, as did my clients.
Will the Stock Market Recover?
The future is speculative. We can make educated guesses—and some are more qualified to do so than others—but ultimately no one knows what the future holds.
On the other hand, while the past is not always a blueprint for the future, it can shed a little light.
Since the end of World War II, there have been approximately 14 bear markets. On average, it takes roughly 23 months to recover. This is an average based on historical data, but the upswing could take a shorter amount of time or a longer one.
In less optimistic news, a bear market is often followed up by a recession, although this is a difficult thing to predict.
In more optimistic news, all bear markets eventually lead to a longer and more robust bull market. This is hardly new information, but rather an observation of data from similar economic activity in the past. Based on past experience, we know it is likely that the stock market will eventually correct itself.
The question to ask is not about “if” but “when.”
Plan and Take Action
Whether you are buying the dip at a fortuitous time, or have picked the right moment to bail, everything comes down to timing. And not just timing, but planning as well.
If your portfolio can afford to take a hit and there is ample time for it to recover, you may not need to change much. If you are close to retirement and your portfolio is sufficient enough to cover your living expenses once you retire, is it worth taking a risk by investing in volatile funds?
Start by asking yourself what amount of your portfolio you can lose without undergoing a major lifestyle change when it’s time to distribute. Then ask how much of your portfolio you would have been comfortable losing before you started to panic.
Where is the red line for you?
The first question is objective; the second is much more subjective. Your answers do not necessarily have to align. However, considering these questions will give you insight into where you currently stand, and in which direction you should be heading.
The Epoch Times Copyright © 2022 The views and opinions expressed are only those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
Image by Oleg Gamulinskiy from Pixabay.
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
