Suze Orman says the stock market is not in recovery mode. Here’s what you need to know

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It’s fair to say that 2022 has been a tough year for investors, both beginners and seasoned. The year started off rough from a stock market perspective, and although equities managed to recover a little over the summer, this rally was followed by another downward dip as the inflation, interest rate hikes and fears of recession have reached their peak.

In a recent podcast, financial guru Suze Orman was keen to point out that the stock market is not, in fact, in recovery mode. Now, when she made that statement, stocks may have been showing more signs of recovery. But Orman doesn’t want investors to let their guard down. It is therefore worth being realistic that stocks could remain volatile for some time.

We could live many more months of turbulence

There are various reasons why the stock market has sent investors into a wild ride. Economic news tends to influence the movement of the stock market so when there is a lot of uncertainty, stock values ​​can fall.

Meanwhile, we are dealing with some pretty uncertain times. Not only does inflation continue to soar, but aggressive interest rate hikes by the Federal Reserve are sparking widespread fears of recession. In fact, some financial experts insist that the United States could be heading for a prolonged period of economic turmoil. And that’s the kind of news that could cause investors to sell stocks, driving prices down.

What to do with your wallet right now

Obviously, the stock market is not in a very stable place these days. But it’s important to act rationally as an investor in light of this.

If you see losses in your brokerage account, don’t panic. You are far from alone in this regard, and if you leave your wallet alone, over time it could easily recoup all the value it lost. But if you go out and start selling stocks because you fear further losses, you may make things worse.

At the same time, it’s a good time to review your portfolio and make sure it looks good and diverse. You don’t want to be overloaded with stocks from just one market segment, because if that sector is hit, your balance could drop more than necessary.

If you are too invested in a single segment of the market, you might consider making a few trades. While dumping some stocks from that segment might mean locking in losses, on the other hand, you might be able to successfully replace those stocks with discounted stocks from another segment.

When will things be better?

It is really difficult to answer this question. If inflation starts to subside and recession fears fade, the stock market could, in turn, start to calm down. But we don’t know when that will happen. And unfortunately, we may first have to suffer a real recession before this wave of market turbulence ends.

This can be a tough pill to swallow as an investor. But it is important to be realistic about the situation. As Orman says, it may take some time for the stock market to recover, so in addition to making sure you have a diversified portfolio, make sure your emergency fund is in good shape. The last thing you want to do is tap into your portfolio when stocks are down because you need cash and your savings account is insufficient.

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