With the market volatility, inverted yield curve, and the talk of recession in the news, people have increased concerns about their 401(k) plans and other investment accounts.
In order best serve my clients and provide clarity on the situation, I have summarized the key points of a talk I heard recently on investing for the middle run by Dr. David Kelly, Chief Global Strategist and Head of the Global Market Insights Strategy Team for J.P. Morgan Asset Management.
Bottom Line - If your portfolio is not sufficiently balanced that you cannot ride out a 20% decline in the market, where you may be forced to sell or need cash when the market is down, then you have too much risk in your portfolio, and should make adjustments now.
History has shown that since markets cannot be timed, it is best to stay invested.
Major points summarized below:
- Speaker predicted a 50/50 chance of a mild recession in the near term, however it may be avoided.
- Risks:
- Tariffs and Trade uncertainty
- Global Slowing
- Inverted Yield Curve
- Steep drop in the Dow
- Lack of confidence
- Uncertainty with effects of “tweets”
- Positive Points
- US economy is still strong
- Trade war – hurts Global economy more than US which is the leverage being used to make positive change in trade which will help the US
- US has never imported a recession due to Global slowing
- Trade peace can come with a “tweet” which will stimulate growth
- When/If recession occurs it’s expected to be much more mild than 2008
- Fed is expected to continue to lower interest rates to stimulate the US economy
- For those who have little or no international exposure in their investment allocations, take advantage of low international valuations which are expected to perform well in the long term.
The primary driver of investment allocation in our practice is each person’s individual financial plan, updated on a daily basis.
If you are concerned about market volatility, please feel free to contact me and we can review your individual financial plan.