Portrait of the Market
After a tough year with both stocks and bonds down, we know most investors have a keen eye on 2023 forecasts. The focus of the vast majority of the media has been on the big R word…Recession. It's clear the Federal Reserve has a very difficult job of trying to steer the U.S. economic ship between two large and dangerous rocks – Recession and Inflation. However, the Fed has made evident via the speed at which they've hiked and their statements that they’re more worried about a sustained period of higher inflation.
Given that, is there any question aside from will there or won't there be a recession? Yes! More important is what would the impact of a recession be on the stock market? The below piece from BlackRock provides some context for how much further the market could move down before recovering. After ending the year down about 18% and bottoming in October down 24% from the peak, the S&P 500 could move down another 20% or more from here. As a result, even if the recession risk is 50% (many on Wall Street think closer to 80%), we think it’s crucial to be prepared for some difficult days ahead; ensure your portfolio return has income to help offset the price depreciation; and most importantly, make sure your financial advisor has a plan to cover your expected cash needs in the coming few years.
This material is provided for informational purposes only and is not intended to be relied upon as a forecast, research, or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are subject to change at any time without notice. The information and opinions contained in this material are derived from proprietary and nonproprietary sources we deemed to be reliable and are not necessarily all-inclusive. All investing involves risk, including the possible loss of principal.
