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Question of the Quarter: Are we in a recession? July 2022 Thumbnail

Question of the Quarter: Are we in a recession? July 2022

Are we in a recession? 


It has been a rough start to the year that has left many people are wondering if we are in a recession. We have record high inflation, the S&P 500 is down 20% year-to-date and Covid-19 continues to cause issues in the supply chain. The war in Ukraine has pushed up energy and food prices. There is a lot of uncertainty in the market and the world right now. A recession could be on the way, but as of right now, it may be too soon to tell. Economists are optimistic that, if we do enter a recession, it will be relatively mild. Regardless of if we are headed for a recession or not, there are some important things to remember as an investor during any period of volatility:

  1. You are a long-term investor. Try not to act on your emotions in the moment, because you are investing for the long term—the rest of your life! Yes, even if you are approaching retirement, you are still a long-term investor. Now is the time to stay the course as history has shown us that the market will bounce back eventually. And, now is the worst time to get scared and sell out. Hang tight and ride the waves of the market. Volatility is a normal part of investing, although it isn’t always fun.
  2. Recessions are a normal part of the business cycle and not all recessions are as severe as the Great Recession of 2008. On average, recessions last 14 months and expansions last 47 months. Often times, when it is announced that we are in a recession, we are already on our way up and out of it before anyone realizes it. Don’t allow your fear from 2008 dictate how you invest today; we are in a different environment than we were in the late 2000’s with the housing crisis. Again, if we do enter a recession, economists do not expect it to be a deep or long recession.
  3. Down markets can provide opportunity. If you are a buyer, this is a great time to remember you are a long-term investor and continue investing on a consistent basis. Think about it: if your favorite store had everything marked down by 20%, you’d probably be pretty excited to buy some new items. If you are in retirement, you still have opportunities. Hopefully, you’ve been rebalancing over time and have some bonds to be able to buy into equities when they are on sale. If you are a Bloom Wealth Advisors client, we’ve been taking some risk off the table for the last year, and we are ready to take buying opportunities when we believe they are timely.  
  4. You have support. Clients of Bloom Wealth Advisors have experts on their side. You are not alone, and if you feel nervous or scared, we want to hear from you. We monitor your accounts daily, and we are making quick moves as we see fit. If you are not currently working with an advisor, right now is the best time to find someone to add to your team.

At Bloom Wealth Advisors, we will continue to monitor the economy, the markets, and your accounts. We know times of uncertainty can be hard to handle and we are here for you to answer any questions or concerns. We have been through this before and we will get through this together. Give us a call if you want to discuss the markets, your portfolio, or the latest news of the day.

 

-Alana Macy, CFP®

Wealth Advisor

 LPL Tracking Number: 1-05303426

Check the background of this firm/advisor on FINRA’s BrokerCheck.