The U.S. trade war with China, Hong Kong in turmoil, Germany’s economy weakening and the U.S. housing market softening, as if those events weren’t enough to worry economists, long term U.S. Treasury Bond yields briefly fell below short term for the first time since the great recession. That inversion sent the stock market plunging on Wednesday.
Ryan Wilson, senior vice president and financial adviser at RBC Wealth Management in Palm Desert says the inversion has signaled a recession in the past but it’s not the end all be all, “It’s something to pay attention to but you also want to see where housing starts are, where unemployment is are we getting into deflationary environment or a super inflationary environment so you’ve got to take multiple things into account and then say okay what does that mean to me?”
He says knowing what you’re invested in and having a plan is key to protecting your assets during volatile markets, “The clients who did really well through the last recession or any recession for that matter, they knew what they owned, they were comfortable owning them, so they didn’t make rash, emotional decision and sell out and then miss the next upswing.”
But if you’re retiring soon or are already relying on your nest egg the rules are different.
“We’re at the stage where our advice to clients is, we’d rather miss out a little bit on the upside and make sure we don’t have a big wealth destroying event,” says Wilson.
He says the U.S. market always pays off long term but, “As we sit today there are some signs that say, ‘Hey you should be cautionary,’ and if it’s money that isn’t meant to be invested it shouldn’t be … just know what you own and make sure it’s high quality.”
Wilson says people should check on their investments at least twice a year and anytime there’s a wild fluctuation in the market. He says now is a good time to meet with a financial adviser to create a plan and find out if the risk in your portfolio is right for you. He says it’s important to find a reputable financial adviser, who will not prey on your fears, or promise you returns that are too good to be true.