I told myself I wouldn’t mention rising inflation, geopolitical unrest and unending supply chain strife this week, but alas, here we are. All of these issues and more have conspired to bring that which we dare not speak about back to the fore again…
The word on everybody’s mind: recession.
This article was originally written by MyWallSt. Read more insights from the MyWallSt team here.
Is a recession on the way?
A red-hot US economy has seen unemployment rates fall and prices continue to rise, leading many — including institutions like Deutsche Bank — to predict a recession. Similarly, recessionary fears are also swirling around Europe in light of the current ongoing invasion of Ukraine by Russian forces and the impact it will have on energy supplies.
A recession is defined as “a significant decline in general economic activity in a designated region, typically recognized as two consecutive quarters of economic decline in a country’s GDP,” according to Investopedia. They’re an inevitable and unavoidable part of economics, but catastrophic events such as 2008’s infamous crash have turned ‘recession’ into a taboo word.
It’s important to remember that there have been 48 recorded recessions since the formation of the US. Investors have — and will — survive these times of turmoil if they follow the same rules we advocate for to create long-term wealth.
With a long-term, buy-and-hold strategy, the threat of a recession can be turned into an opportunity by picking up bargains as the hordes panic-sell Downturns are inevitable — both in the economy and in investing — but losing money doesn’t have to go hand in hand with that.
The news headlines are likely to begin filling up with talk of shock: supply, inflationary and recessionary. Things will unfortunately get a bit worse before they get better. Just make sure to remember your horizon, trust in your long-term plan, and weather the storm to emerge in an even better financial situation.
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