So far, 2022 has been, in a word, volatile. With the emergence of omicron, supply chain issues choking the economy, inflation the highest it has been in decades and now the war drums beating in Europe, investors are getting nervous and the markets are showing the strain.
As political guru James Carville once said, "It's the economy, stupid!"
Following that sage advice, Augusta University’s Wendy Habegger is here to offer expert perspective to journalists looking to figure out just what’s going on with the markets and what investors and the public can expect in the coming months.
Q: What's the best advice to give people when the stock market is on such a roller coaster ride?
“Frankly put, if one can't stomach when the roller coaster drops, don't get on the ride. If one does not have much tolerance for risk, they should not invest in the stock market. If one is already invested in the stock market and breaking into a cold sweat every time they look at their stocks, then they need to take a cash position, meaning cash out of the stock market. The market does not reward anyone based upon their level of anxiety. What good is making gains on stocks if one will turn around and spend those gains treating their ulcers? I liken it to pro sports athletes who don't retire when they are still healthy. What good is all the money they earned if they are only going to be spending it on medical treatments for the rest of their lives? What kind of quality of life is that?"
Q: With the market trending down right now, if people can invest, is this the best time to do so?
“Whenever the market trends down, it is always a great time to buy stable companies with solid cash flows and certain commodities. Look for those companies and commodities that always do well regardless of what is happening in the economy. But remember my response to the above question. One should do this if and only if they can tolerate risk.”
Q: Should people look at safer places to put their money for the time being, and what would some of those places be?
“Again, this depends upon their level of risk tolerance. If they are risk tolerant, they should shift into less risky investments. If they are not risk tolerant, cash out and put it in their savings accounts or CDs.”
Q: Does the emergency fund rule of thumb still come in to play, maybe now more than ever?
“Yes, but I don't go by the standard rule of thumb for emergency savings – having three to six months of expenses saved. I teach students their goal should be to have 12 months of expenses saved. The three to six months rule is obsolete. We saw this with the recession of 2007-09 and with the pandemic. People need to be able to live without employment longer because there is no definitive time frame for when one will find gainful employment and the government should not be relied upon to support the mass population in the meantime. Also, even when the government does provide assistance, not everyone receives it and some still never recover from the aftermath. “
The economy is front and center for just about every American business, investor and household – and if you’re a reporter looking to know more, then let us help.
Wendy Habegger is a respected finance expert available to offer advice on making the right money moves during volatile times. If you’re looking to arrange an interview, simply click on her icon now to arrange an interview today.
