Oftentimes, the headlines in the world of business will start barking about a possible recession when the economy looks to be taking a turn for the worse. Everyone fears the economy is spiraling out as the news turns increasingly severe.
Bear in mind, however, we have survived plenty of recessions in the past.
Is it possible to brave the economic storm without your investments being carried away in the wind?
“In the global economic cycle, recessions are a natural and unfortunate occurrence”, says Richard Meyer Cayne of Meyer International in Bangkok, Thialand. “That doesn’t mean you don’t have to be diligent about your investments when a recession hits. While downturn is a natural part of recessions, there are methods and strategies we can use to diminish the effect they have on our portfolios”.
If economic growth is in the negative for over at least two quarters, or six months in layman’s terms, this is what we call a recession. What causes a recession, however, can be far more complex.
First slow, then ultimately negative growth can occur when certain events impact the economy. For example, major reactions to advances in technology or the market (such as the dot-com bubble or the subprime mortgage crisis) or geo-political instability (such as the US-China trade war or Brexit). These events can create a domino effect.
While many have a single cause they point to, more often than not it is a combination of several events. So even if the experts are in agreement that we are in a recession, the root cause of the recession’s origins can be difficult to pinpoint.
Oftentimes, companies turn to worker layoffs and operational slowdowns as the result of a recession. Consumer spending often dips, certain companies may fail or at least face losses and there is usually an uptick in unemployment.
Investors are usually hesitant to buy or keep preexisting holdings, for fear of a continuing drop and thus more severe losses, some of which may be too big to bounce back from.
But it’s not the end of the world.
Many companies weather a recession quite well. After all, people still need things like medical care and groceries. Certain fixed income securities can serve as excellent fallbacks during an economic downturn; commodities such as gold, for example.
And just because one country enters a recession doesn’t necessarily mean the whole world will follow suit. Such is the nature of our current, diversified global economy.
This even applies to the United States. As the world’s largest economy, the US has slipped into recession 11 times in the post-WWII era, but there have only been 4 recessions globally in that time frame.
So how is the average investor to respond to a recession (or even know if a recession is about to occur at all) when even the experts are in contention over if a recession is looming?
Should investors buy? Should they sell? And just what should you be buying or selling if the answer to either of those questions is yes?
First off, always bear in mind that recession is part of a broader economic cycle.
If you look at things from a ‘big picture’ standpoint, you’ll realize that your portfolio will recover as the markets do. Of course, taking this on faith is not recommended.
Normally, it is important to review your portfolio regularly. If a recession is something that concerns you regarding the impact on your investments, it’s imperative that you consult with a trusted financial expert like Richard Meyer Cayne. He can help you determine what adjustments should be made, if any.
Richard Meyer Cayne of Asia Wealth Group Holdings, the Meyer Group, Meyer Asset Management and Meyer International Ltd has been involved in wealth management planning for decades. Originally born in Montreal Quebec, Canada, he later relocated to Tokyo, Japan for over 15 years and now resides in Bangkok, Thailand. While he runs the Meyer Group and serves as the high credibility CEO of Asia Wealth Group Holdings Ltd, a London, UK Stock Exchange-listed Financial Holdings Company, as well as the Managing Director of the Meyer Group of Companies www.meyerjapan.com. and has additionally been the managing director of multiple organizations that specialize in helping high net worth individuals with succession planning .
Having worked with clients all over the globe with everything from portfolios to bonds to mutual funds to offshore investing to investing in retirement for your golden years, Richard Cayne of Meyer International can help you invest the right way and protect your cash. Richard has been a financial advisor involved in wealth management planning solutions and asset management in Asia for over 25 years and while living in Tokyo, Japan, he assisted many high net-worth Japanese families create innovative international tax and wealth management planning solutions. The financial holding public company of which he is CEO can be seen at Asia Wealth Group Holdings Ltd or the stock exchange link:
Asia Wealth Group Holdings Ltd – Richard Cayne Thailand. Meyer Asset Management Ltd has been in the wealth management space since March 2000 and uses fundamental analysis along with modern portfolio theory.
His image worldwide as a professional advisor has been sterling and he maintains a firm command and understanding of all things finance-related.