Don't fear a recession…Instead, use it to accelerate you profits!
The US has just entered into a technical recession. That is, two consecutive quarters of negative GDP growth.
Now, some think the US economy will struggle over the next year as inflation remains high, the Fed hikes interest rates, and consumers become more conservative with spending.
Others believe our economy has a lot of room to run — especially as we start to get back to normal following the global Covid Crisis.
I don't have a crystal ball…Nobody does.
But here are my thoughts…
The benefit of relying on dividends in a bear market
When the markets are down, dividends give you the ability to continue generating income without having to worry about selling your investment.
That’s how you lose money.
When stock prices are all over the board, the mature, stable companies who pay dividends have adequate cashflow and excess reserves to fulfill their dividend payouts, and your nest egg remains untouched, free to grow and compound over time.
You can’t predict a bear market, nor can you anticipate how long a down market will last. You can, however, position your retirement portfolio to weather the ups and downs with a high level of confidence that you won’t sacrifice your retirement income. To learn more go here.
How risk is already priced into the stock market
One of the most intriguing (and sometimes infuriating) things about the stock market is it often trades higher or lower ahead of major changes in the economy.
So, when the environment is ripe for a recession, chances are good that the market has already started to trade lower in anticipation.
That’s exactly what we’ve seen so far this year.
As soon as 2022 started, investors started getting worried about a recession.
Interest rates rose, stock prices slid, and confidence levels dropped.
We’ve spent nearly seven full months watching this whole process evolve.
Now a recession is upon us, the market may actually be ready to start trading higher.
In fact, the NASDAQ recently rallied over 4% - the highest one day rise since 2020…and this was even AFTER the Fed raised rates by 0.75%.
It’s one of the reasons I believe some growth stocks are already priced attractively compared to expected earnings.
And if those expectations start to move higher, the stock market could once again start anticipating the recovery before it happens.
Is there opportunity in 2022’s biggest losers?
Over the past six months the JSE All Share index dropped over 11% on average.
The JSE’s Resources index is down a whopping 28% for the same period.
And in the past 12 weeks, 340 of the JSE’s 470 listed instruments (Stocks + ETFs + ETNs) are DOWN.
So, what are the biggest losers for 2022 – and do any of them present opportunity? Go here to find out.
A second shot at tech profits, today?
As an investor, you shouldn’t fear a recession. While the word may sound scary, recessions don’t necessarily mean your retirement fund needs to lose value.
In fact, you could use a recession to adjust which stocks you’re invested in.
This way, you not only protect your wealth when other stocks are trading lower. But you can also accelerate your profits when stocks start moving higher again.
Looking through some of the hardest-hit growth stocks from the last several months, there is some great value in names that I wouldn’t have dared to touch at peak prices.
Today, many of these growth stocks are trading at 50%, 70%, or even 80% discounts to where they used to trade.
Not all of them will rebound.
However, some of these companies have novel technologies, unique products, or may turn out to be takeover targets for larger competitors.
Some of them are building amazing solutions to tackle some of the world’s most prevalent problems today – such as the food, energy and supply chain crises.
So even if we are headed into a full-blown recession, these names have already been beaten down.
And today, they’re offering investors a second shot at BIG profits!
That’s why you should take a look at my latest issue of South African Investor out now…
In it I reveal one of the most important technology trends of our lifetime. Forbes says it could cause shockwaves similar to those felt by the first PC and even the internet. It could revolutionise EVERY industry on Earth… And hand EARLY investors returns of a lifetime. It’s an investment opportunity too large to ignore!
You can claim a trial copy here.