{"id":11802,"date":"2022-07-07T13:49:28","date_gmt":"2022-07-07T13:49:28","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=11802"},"modified":"2022-07-07T13:49:29","modified_gmt":"2022-07-07T13:49:29","slug":"how-low-will-stocks-go","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/how-low-will-stocks-go\/","title":{"rendered":"How Low Will Stocks Go?"},"content":{"rendered":"\n

Erica M. from Waterbury, CT asks: <\/em>Hi Mitch, I\u2019d like to hear your thoughts on this being the worst first half of the year for stocks in something like 50 years. It feels like this is bigger than just a possible recession, and many are saying it could get worse. Do you agree?<\/p>\n\n\n\n

Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n

Thank you for sending your question. The stat lines you\u2019re seeing about 2022\u2019s start for equities is correct. U.S. stocks as measured by the S&P 500 posted their most negative first half of a year since 1970, and even investment-grade bonds and U.S. aggregate bonds posted their worst start in history.<\/p>\n\n\n\n

These statistics probably feel pretty scary, but I think it\u2019s important to note for context that this was not the worst six-month stretch for either category. The stat lines are referencing performance from January to July, but at the end of the day, stocks, bonds, and risk assets don\u2019t actually follow a calendar.1<\/sup><\/p>\n\n\n\n

Investing During a Potential Recession\u2026What Steps Can You Take?<\/a><\/u><\/strong><\/p>\n\n\n\n

The market took a complete turn since the beginning of this year. Inflation continues to rise and recession talks are still in the air. Many investors are worried about their portfolio and retirement assets.  <\/p>\n\n\n\n

First, we believe it is essential to look at history to understand the importance of avoiding rash moves. It\u2019s common for investors to think they should time the market or exit the market out of fear, but as difficult as it may seem, it\u2019s better to remain calm.<\/p>\n\n\n\n

It\u2019s easier said than done, but the actions you take right now have the greatest potential to define your financial future. That\u2019s why we have put together a free Black Swan Investing Playbook<\/em> with insights and guidance to help you seek success when investing through these unprecedented times. If you have $500,000 or more to invest, get our free investing playbook today.<\/p>\n\n\n\n

Download – The Black Swan Investing Playbook2<\/sup><\/em><\/a><\/u><\/strong><\/p>\n\n\n\n

Nevertheless, the sharp downturn has rattled many investors, and it\u2019s natural to wonder whether it only gets worse from here. The short answer is that it might, but it is also crucial to understand that at some point \u2013 which no one can forecast \u2013 stocks will rally back quickly and strongly. And these rebounds almost always happen when investors least expect it.<\/p>\n\n\n\n

Investors should be on the lookout for worsening narratives about the economy and more negative headlines, which usually signal that stocks are establishing a bottom. As I\u2019ve said before, now is a time to be patient \u2013 investment assets are far cheaper today than they were at the beginning of the year, and that\u2019s ultimately a good thing for investors looking out over the next 12-36 months.<\/p>\n\n\n\n

Another factor to consider is that weak stretches for stocks are usually followed by strong ones. When the S&P 500 has declined more than -15% in the first six months of the year, as we saw in 1932, 1939, 1940, 1962, and 1970, the average return in the second half of the year was +24%. These rallies tend to happen because the selloffs pull valuations down to levels where stocks become very attractive relative to future earnings and cash flows, and buyers swoop in to secure ownership of those future profits at a relatively low cost. In the current environment, if the U.S. evades recession or the recession is shallow relative to past pullbacks, the market will suddenly appear oversold, which I believe it is now.<\/p>\n\n\n\n

Almost everyone at this point is looking for the recession and staying worried about the impact of inflation, which in my view means that these fears are already baked into stock prices. What I\u2019m looking for is an outcome that is even just slightly better than what the gloomy forecasts are calling for, and I think we\u2019ll get it this year with moderating inflation pressures and better-than-expected growth.<\/p>\n\n\n\n

So, in times like these, it is better to base your decisions on research, not emotions! Don\u2019t sell and exit the market or wait on the sidelines out of fear.<\/p>\n\n\n\n

To help you do this, we have put together a free Black Swan Investing Playbook3<\/sup><\/a><\/strong><\/em> with insights and guidance to help you seek success when investing through these unprecedented times. If you have $500,000 or more to invest, get our free investing playbook today. You\u2019ll learn about seven time-tested guidelines to help you seek investing success through this historic \u201cBlack Swan\u201d market downturn.<\/p>\n","protected":false},"excerpt":{"rendered":"

After posting their worst first half of the year since 1970, where will stocks go from here? Mitch offers his experienced perspective.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-11802","post","type-post","status-publish","format-standard","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/11802","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=11802"}],"version-history":[{"count":2,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/11802\/revisions"}],"predecessor-version":[{"id":11804,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/11802\/revisions\/11804"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=11802"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=11802"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=11802"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}