The stock market’s future remains uncertain as experts warn about the potential economic implications of new tariffs.
The Federal Reserve Bank of New York estimates a 30% chance of a recession in the next 12 months, while analysts at Goldman Sachs and J.P. Morgan put the odds at 45% and 60%, respectively. Both firms noted that tariff policies have increased recession risks for 2025.
If a recession or market crash is looming, there are three common mistakes investors should avoid.
https://x.com/LizAnnSonders/status/1921889873796964608
First, panic-selling investments could be costly, as mistiming the market may result in selling at low prices and buying back at higher prices later. Staying invested throughout downturns often leads to the biggest rewards during recovery periods.
Second, relying too heavily on stock prices can be misleading.
https://x.com/TheStalwart/status/1921958177014223173
Avoid these common investing mistakes
Strong companies may see their stock prices fall during recessions, but this doesn’t necessarily mean they are bad investments.
https://x.com/ETNOWlive/status/1922121629800530205
Focusing on a company’s fundamentals, such as its financial stability, risk management, and leadership, can help identify companies more likely to survive and thrive during tough times. Third, investing short-term cash can be risky. Pulling money out of the market after stock prices sink could result in significant losses.
Investors should only invest money they won’t need for the foreseeable future, ideally planning to stay invested for at least five to seven years to allow enough time for recovery. Historical data shows that the average bear market lasts around nine months, with longer downturns extending up to two years. The stock market’s future may be uncertain, but having the right strategy is key if a crash or recession is looming.
By maintaining a clear head and avoiding these common mistakes, investors can more effectively manage their portfolios and protect their finances during challenging times.
Image Credits: Photo by Aidan Hancock on Unsplash
