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Investing.com – JPMorgan Private Bank – a division – believes that the US economy is likely to slide into recession by the end of the year, writes Business Insider.
In a mid-2023 outlook, the asset manager said there are 5 ways investors can easily navigate a recession that is likely to come.
1. Preparing for the next bull market
The asset manager believes that the worst for the US stock market is over, and although not everything is as smooth as we would like, investors should use market volatility to restore portfolios.
2. Investing abroad
According to JPMorgan Private Bank, buying shares in the stock markets abroad will also help to cope with the recession. For example, European stocks, which have outperformed the US over the past 12 months, and even Chinese stocks, although the Chinese economy is still stalling and lagging behind, there is every reason to believe that the situation may change.
At the same time, the main advice to investors is to take into account the impact of the currency on international investment, as there is reason to expect strengthening, and other things being equal, European stocks will be more attractive to American investors.
3. Avoiding concentration on any one stock
A long-standing problem for many clients is holding a concentrated position in a single stock or security. Due to spikes in volatility, this type of investment poses a particularly serious risk.
4. Cash versus bonds
The bank’s US customers have invested cash after the Fed’s sharp rate hike over the past 15 months. However, now, given that cash will generate less income until the end of 2023 and beyond, this is not such a profitable investment. If the Fed decides to cut the rate, then investors may need to reinvest more than $500 billion (between 25% and 30% of their investment assets) into a lower interest rate environment.
5. Risks and opportunities in banking and commercial real estate
When investing in the US banking and commercial real estate sectors, investors should be careful as these 2 industries have been hurt by interest rate hikes, as well as the collapse of several major banks and distressed commercial real estate assets. JPMorgan Private Bank advised high-quality borrowers who typically borrow from banks and can buy distressed assets at below intrinsic value.
— Materials from Business Insider were used in the preparation
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2023-07-03 15:27:00
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