What Wall Street Strategists Recommend In This Bear Market

The year has been stressful for those who own almost every type of stock. The S&P 500 (^GSPC) is down 16% year-to-date. The Nasdaq (^IXIC) is down 24% over the same period. Even the Energy Sector (XLE) – the only positive year so far – has seen some of its gains evaporate recently.

In the new Yahoo Finance series, we look at some of the strategies experts recommend on how to navigate a bear market. To start things off, we asked them what they think investors should do in an environment of tighter monetary policy and the threat of a recession.

We’ve seen some recovery days over the past two weeks. Have the markets bottomed out? What should investors do now?

“The names that have really benefited since mid-June and the last Fed meeting have been top beta areas in the market. Some of the names that are kind of a non-profit tech would be a way to summarize that,” Chris Bullard, managing director and head of market strategy, told Yahoo Finance Live. .

Bee added, “These are the names that had very clear movements and this is a way to bring the husband back to these exposures.” “I think using this time, this counter-trend movement, to collect some cash and to give yourself some choices for what should be a push toward new lows, is what we’d recommend here.”

He pointed out that “the movement that we have witnessed during the past two weeks is unlikely to be a continuous increase.”

When does surrender occur?

Steve Sosnick, chief strategist at Interactive Brokers, told Yahoo Finance Live.

“We are still in a bear market and we are still seeing headwinds from the Fed,” he said.

The Federal Reserve is expected to raise interest rates at its next meeting next week. Tighter monetary policy has been a headwind for stocks as liquidity dries up.

“Don’t be attracted” to “short, sharp and fierce bear market rallies,” he advised.

The story continues

“You don’t really get bottoms unless you see a change in fiscal or monetary policy. I don’t see that now,” he added.

Should investors hold on to stocks that lost money?

Some experts say that this depends on the company in question and the investor’s time horizon.

“The average bear market for the broader S&P 500 has taken nearly a year to come down, but that could be much longer for individual stocks (if they recover at all), Baird investment strategy analyst Ross Mayfield told Yahoo Finance. )”.

“Investors should ask themselves whether the issue of investing to own shares has fundamentally changed and what is the timeline for the money actually invested,” he added.

He also noted that “market volatility and sell-offs are simply part of the investor’s long-term experience — they happen regularly but always end up eventually bringing the market to new highs. Moreover, holding cash in an effort to perfectly time the market bottom is a fraught proposition. Very risky and could result in someone missing out on the impulse that starts a new bull market.”

How do investors prepare their portfolios in an economic slowdown or recession?

“When we look at percentage weather odds, we’re going to go into a recession or when we just see a slowing growth environment. We give a slight edge to the slowing growth environment, simply because of the strength from the consumer coming into this,” Kristen Petterley, president of CIti Global Wealth, North America Investments for Yahoo Finance.

She recommends “finding some solid diversification within the portfolio across fixed income and equities. You tend to be really good and relatively conservative when it comes to stretching for yield, or expanding yourself when it comes to credit,” she added.

“I think there is a portfolio solution here as an investor, to remain fully invested, but with an assurance of raising quality across equities and fixed income,” Bitterly said.

Are some stocks simply oversold?

Ratings have dropped significantly.

Brian Jacobsen, chief investment strategist at Allspring Global Investments, told Yahoo Finance that one area he loves is the aspect of consumer goods and technology.

“It’s almost like an approach here where there are a number of names that seem to have been thrown under the bus so to speak as people become more pessimistic thinking that the Fed might cause a recession as they try to tame inflation,” he added.

Enas is a market reporter covering stocks. Follow her on Twitter at Tweet embed

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