It is still possible to make wise and profitable financial decisions even in a difficult and unstable macroeconomic environment.
- In a recent discussion with Yahoo Finance Live, Providence Financial & Insurance Services President Anthony Saccaro argues that a recession is still likely.
- He recommends focusing on income-producing investments, reinvesting dividends and dollar cost averaging, and restructuring 60/40 investment plans.
- Build an income portfolio with diversified high-quality companies that can provide steady revenues through dividends and interest.
Why It’s Important
Economic uncertainty, national credit downgrades, and interest rate hikes could still destabilize the economy. Saccaro went as far as to predict that the market will soon experience a correction for the current trends, which could possibly result in a market crash. Because of this, he is warning his clients to prepare for the worst-case scenario as a precaution.
Saccaro is cutting against the current market sentiment that a soft landing is likely. The majority of analysts are looking at continuing good news for the jobs market and improving inflation numbers as a sign that the economy is resilient enough to survive these trends.
However, he is not the only analyst preparing for the worst-case scenario. As we previously reported, the Federal Reserve hiked interest rates to a 22-year high on July 27 and suggested that it is internally considering additional hikes in the fall. This would suggest that the Fed is more worried about entrenched inflation than analysts predict, which could unsettle the economy, damage the jobs market, and spark a recession.
“I think that there’s one thing that we have to be careful of, and that is we’re not out of the woods yet. Some of the conversations I’ve had with clients is they feel like maybe we’re not going to have a recession. So I want to caution everyone first that a recession could still be around the corner. We do have an inverted yield curve,” says Saccaro.
“When you look at the market history, the fact is there are long periods of time where the market has no growth followed by long periods of time where the market does really well. And we’ve just come out of a 13-year period, starting in 2009, where the market’s done really, really well, and a lot of analysts—a lot of professionals, including myself, are thinking that the next decade may not be so good.”