If you have followed along and avoided the massive drop so far this year, congrats! But your work isn’t done yet.
The hardest part of navigating a Recession is understanding when to get back in. To this point, we have priced in the rate raises, in my opinion, but have yet to price in the changes in forward-looking earnings and revenue adjustments.
If you look at all of the occurrences since 1950 where the market dropped 25%, if you would have invested and then looked at your portfolio 12 months later you would have averaged a 21% return. 37% after 3 years. Even though the market continued to decline after the 25% point before recovery. But this DOESN'T mean that it is time to jump into the market now....
As always, managing risk is important because not all recessions are the same, but staying nimble, buying quality, and systematically scaling into positions to limit emotional decisions during volatile markets can turn good statistics into once-in-a-lifetime investment opportunities.
More to come soon!