The mood in the current stock market is one of resignation triggered by the Federal Reserve’s hawkish tone and suggestion that interest rate hikes are on the way to cool an overheating economy, investors will be looking for another gauge of inflation in the coming week.
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.
1) 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 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.
In the weeks to come, investors can expect increased volatility. While wild price changes might provide chances for regular traders, especially when there are large declines in stock prices, they can also increase the anxiety of even the most consistent long-term investors.
Diversifying your portfolio beyond exchange listed stocks and bonds to alternative assets with a weaker correlation to these markets is one strategy to protect your portfolio from the effects of volatility.