The stock market’s recent performance indicates suggest that should be very cautious with stocks.
Instead, this is an excellent time to raise cash, starting with liquidating the worst-performing names in your portfolio.
However, you should remain active in the market and begin developing a robust watchlist. Look for stocks that are contracting less than others or the major indexes, these will have relative strength lines that are rising.
Inflation Remains The Biggest Stumbling Block, But….
The impact of increasing prices on Americans is palpable: According to the latest Forbes Advisor-Ipsos Consumer Confidence Weekly Tracker, 65% of adults anticipate inflation will rise in the coming year.
The rise in inflation is important for market players because excessive inflation can hurt both expenditure, which accounts for around two-thirds of GDP, and consumer sentiment.
However, experts advise that, if possible, investors continue to invest consistently, particularly for those with longer time horizons.
Is the Bond Market Telling Us Something?
The 2-year and 10-year Treasury rates have inverted for the first time since 2019, signaling the possibility of a recession.
An inverted yield curve happens when shorter-term bond rates are higher than longer-term bond rates, and it can suggest an impending crisis. However, analysts caution that it is only one of many recession indicators.