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When Will the Stock Market Recover? Strategies to Use During Uncertainty

Though we don’t know when the stock market will recover, that hasn’t stopped some from making predictions. Here are a few forecasts.
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The honest truth is that we don’t know when the stock market will recover. It could recover over the next month, year, or even longer. To make matters worse, trying to guess when the stock market will recover is a form of market timing. Unfortunately, market timing is a nearly impossible task.

Time in the market can take the guesswork out of predicting stock moves. More importantly, it is time in the market that can lead to superior returns. As opposed to forecasting when the stock market will recover, remaining invested in stocks can ensure that you’re invested when the market finally recovers.

Long-term buy-and-hold investors may prefer to simply remain invested. That may be because they know that stock markets have crashed many times throughout history. Each time, the stock market has recovered. By staying invested in the stock market during troubling times, investors can get rid of the risk of being wrong when forecasting stocks eventual recovery.

In other words, by staying invested, you’re taking luck out of the equation. In addition, by staying invested in stocks, buy-and-hold investors incur fewer trading costs than investors buying and selling based on ever-changing forecasts.

Though we don’t know when the stock market will recover, that hasn’t stopped some folks from making predictions. Here are a few forecasts of when the stock market will recover.

Will the Stock Market Recover in 2022? Two Optimistic Views

There is no shortage of views about the stock market in 2022. Some are positive, and some are negative. Here are a few optimistic views for investors to consider.

  • Though most stock market indexes in the U.S. have entered a bear market of negative 20% or more, one analyst thinks the markets will fully recover by the end of the year. This article, based on a report by JP Morgan (NYSE: JPM), says the U.S. will avoid a recession this year due to a strong consumer and the reopening of China after its strict COVID-19-related lockdowns.

In addition, the analyst thinks a solution to the conflict between Russia and Ukraine could happen in the second half of this year. If that is the case, high oil and natural gas prices could come down and inflation could moderate.

  • Another piece based on the opinion of CFRA Chief Investment Strategist Steve Stovall is also optimistic about a stock market recovery by the end of 2022. Stovall observed, “In 2021 we had a price increase in excess of 20%, and in each of the 20 years since World War II in which we had a calendar year gain of 20% or more, the market then fell into a decline averaging around 11%. Most times the decline started in the first quarter. That’s exactly what we’ve got this time around.”

He added, “If there is a silver lining to that historical data,” he said, “it is that any of the observations where the decline has started in the first half of the year, we got back to break-even by the end of the year every time.”

Will the Stock Market Recover in 2022? Two Pessimistic Views

With stock market indexes in bear territory, it’s easy to see why folks think a stock market recovery may take some time. These folks think a rally in the stock market goes past 2022.

  • An online article by GoBankingRates says, according to Reuters, the average bear market typically bottoms out after a little more than 12 months and then takes two years to fully rebound. Today we are in June, so by historical standards, a stock market recovery may happen well beyond 2022.

The article also points out that things could be different if there is a recession along with the bear market in 2022. For instance, an average recovery time of roughly one year once a bear market reaches the bottom. But that can expand to 15 months if a recession accompanies the bear market. If that is the case, the stock market will recover after 2022.

  • This article from Money.com also thinks a recession will determine when the stock market will recover. The article says, “Looking at the data from 1950 until today, if a bear market was accompanied by a recession, the weakness in stocks usually continued longer.” Though the U.S. has not officially entered a recession yet, the predictions of a recession are mounting.

According to the article, the chances of a stock market recovery in 2022 look bleak. It said, “The worse a bear market is, the longer it takes to recover, LPL Research found. For example, when a bear market decline was less than 22%, it took just seven months on average to recover, but when a bear market decline was more than 22%, it took an average of 27 months.” The S&P 500 stock index is down just over 23% this year.

Two Strategies to Use During Uncertainty

There are a ton of questions about when the stock market will recover. That situation can leave investors worried. When emotions are running high, it can lead to bad investment decisions. Try these investment strategies to take the psychology out of it.

  • Dollar-Cost Averaging: Invest a set amount of money in your accounts regularly. That may be monthly, quarterly, or with each paycheck (like one does in a 401(k)). When the stock market retreats, you’ll buy more shares of each stock, mutual fund, or ETF with your set dollar amount. When the market finally recovers, you’ll benefit from owning more shares than if the market never fell.
  • Averaging Down: In a similar vein, increase your investment when your favorite stocks, mutual funds, or ETFs get hit. When they recover, the securities you bought at lower prices will boost the returns in your account.

These strategies may be easier said than done, but they’re both long-term investment strategies. Long-term plans often perform better than short-term trading strategies.

The post When Will the Stock Market Recover? Strategies to Use During Uncertainty appeared first on Investment U.

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China Shortens Travel Quarantine In COVID Zero Shift

China Shortens Travel Quarantine In COVID Zero Shift

China unexpectedly slashed quarantine times for international travelers, to just one…

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China Shortens Travel Quarantine In COVID Zero Shift

China unexpectedly slashed quarantine times for international travelers, to just one week, which suggests Beijing is easing COVID zero policies. The nationwide relaxation of pandemic restrictions led investors to buy Chinese stocks.

Inbound travelers will only quarantine for ten days, down from three weeks, which shows local authorities are easing draconian curbs on travel and economic activity as they worry about slumping economic growth sparked by restrictive COVID zero policies earlier this year that locked down Beijing and Shanghai for months (Shanghai finally lifted its lockdown measures on May 31). 

"This relaxation sends the signal that the economy comes first ... It is a sign of importance of the economy at this point," Li Changmin, Managing Director at Snowball Wealth in Guangzhou, told Bloomberg

At the peak of the COVID outbreak, many residents in China's largest city, Shanghai, were quarantined in their homes for two months, while international travelers were under "hard quarantines" for three weeks. The strict curbs appear to have suppressed the outbreak, but the tradeoff came at the cost of faltering economic growth. 

The announcement of the shorter quarantine period suggests a potentially more optimistic outlook for the Chinese economy. Bullish price action lifted CSI 300 Index by 1%, led by tourism-related stocks (LVMH shares rose as much as 2.5%, Richemont +3.1%, Kering +3%, Moncler +3%). 

"The reduction of travel restrictions will be positive for the luxury sector, and may boost consumer sentiment and confidence following months of lockdowns in China's biggest cities," Barclays analysts Carole Madjo wrote in a note. 

CSI 300 is up 19% from April's low, nearing bull market territory. 

Jane Foley, a strategist at Rabobank in London, commented that "this news suggests that perhaps the authorities will not be as stringent with Covid controls as has been expected." 

"The news also coincides with reports that the PBOC is pledging to keep monetary policy supportive," Foley pointed out, referring to Governor Yi Gang's latest comment. 

She said, "this suggests a potentially more optimistic outlook for the Chinese economy, which is good news generally for commodity exporters such as Australia and all of China's trading partners." 

Even though the move is the right step in the right direction, Joerg Wuttke, head of the European Chamber of Commerce in China, said, "the country cannot open its borders completely due to relatively low vaccination rates ... This, in conjunction with a slow introduction of mRNA vaccines, means that China may have to maintain a restricted immigration policy beyond the summer of 2023." 

Alvin Tan, head of Asia currency strategy in Singapore for RBC Markets, also said shortening quarantine time for inbound visitors shouldn't be a gamechanger, and "there's nothing to say that it won't be raised tomorrow." 

Tyler Durden Tue, 06/28/2022 - 07:38

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Economics

Energy Stocks Are Down, But Remain Top Sector Performer

High-flying energy shares have hit turbulence in recent weeks but remain, by far, the leading performer for US equity sectors so far in 2022, as of yesterday’s…

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High-flying energy shares have hit turbulence in recent weeks but remain, by far, the leading performer for US equity sectors so far in 2022, as of yesterday’s close (June 27), based on a set of ETFs. But with global growth slowing, and recession risk rising, analysts are debating if it’s time to cut and run.

The broad-based correction in stocks has weighed on energy shares lately. Energy Sector SPDR (XLE) has fallen sharply after reaching a record high on June 8. Despite the slide, XLE remains the best-performing sector by a wide margin year to date via a near-36% gain in 2022.

By contrast, the overall US stock market is still in the red via SPDR S&P 500 (SPY), which is down nearly 18% year to date. The worst-performing US sector: Consumer Discretionary Sector SPDR (XLY), which is in the hole by almost 29% this year.

The case for, and against, seeing energy’s recent weakness as a buying opportunity can be filtered through two competing narratives. The bullish view is that the Ukraine war continues to disrupt energy exports from Russia, a major source of oil and gas. As a result, pinched supply will continue to exert upward pressure on prices in a world that struggles to quickly find replacements for lost energy sources. The question is whether growing headwinds from inflation, rising interest rates and other factors will take a toll on global economic growth to the point the energy demand tumbles, driving prices down.

The market seems to be entertaining both possibilities at the moment and is still processing the odds that one or the other scenario prevails, or not. Meanwhile, energy bulls predict that the pullback in oil and gas prices is only a temporary run of weakness in an ongoing bull market for energy.

Goldman Sachs, in particular, remains bullish on energy and advises that the potential for more prices gains in crude oil and other products “is tremendously high right now,” according to Jeffrey Currie, the bank’s global head of commodities research. “The bottom line is the situation across the energy space is incredibly bullish right now. The pullback in prices we would view as a buying opportunity,” he says. “At the core of our bullish view of energy is the underinvestment thesis. And that applies more today than it did two weeks, three weeks ago, because we’ve just seen exodus of money from the space… investment continues to run from the space at a time it should be coming to the space.”

Meanwhile, a bit of historical perspective on momentum for all the sector ETFs listed above reminds that the trend direction remains bearish overall. But contrarians take note: the downside bias is close to the lowest levels since the pandemic first took a hefty bite out of market action back in March 2020 (see chart below). This may or may not be a long-term buying opportunity, but the odds for a bounce, however, temporary, look relatively strong at the moment.


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Economics

Five things you can do to help you have a more positive birth experience

Becoming a parent can be nerve-wracking – but there are many things you can do to feel more in control.

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Don't be afraid to make your preferences clear to your care provider. Syda Productions/ Shutterstock

Whether you’re a first time parent or have had children before, you’re probably willing to try anything to ensure you have the most positive birth experience you can. After all, the kind of birth experience you have can not only affect your own mental health, but can have an affect on parent-child bonding, as well as partner-to-partner relationships for years after giving birth.

It can be confusing to know what to expect or where to turn to for advice, especially as maternity services have changed due to falling staff numbers and the continued impact of COVID-19. But here are a few things you can do yourself as you navigate your maternity care, which may help you have a more positive birth experience:

1. Get educated

Studies have shown that signing up for antenatal classes can help reduce fear, depression and anxiety – both during pregnancy and after birth.

Typically, antenatal classes will help you understand what’s happening to your body during pregnancy and explain the birth process. They may also teach you coping strategies to help relax during labour, alongside guidance on caring for your new baby. Antenatal classes can also be a great way of meeting other parents going through the same thing as you.

Another option is creating a personalised care and support plan, which is offered by most NHS trusts in the UK. This is a tool you can use with your care providers to explore what’s important to you – and discuss what your range of options are, such as your preferred place of birth, or whether you prefer skin-to-skin contact with your baby immediately after birth.

Understanding what your body’s going through, and making a personalised plan for your birth, may help you feel more prepared and less anxious about what to expect.

2. Know your carers

Being cared for by one nominated midwife, or being assigned to a team of familiar midwives, is shown to be associated with better outcomes for you and your baby – including decreased chance of having a premature labour and lower likelihood of needing interventions (such as birth with the help of forceps). You’re also more likely to be satisfied with your overall experience.

When an allocated midwife is not an option this makes choosing the right birth partners crucial. They can not only offer you reassurance, encouragement and support but can be your advocate, help you try different positions in labour and help provide you with snacks and drinks. Most typically these would be trusted loved ones. But be aware that research shows birth partners may also feel anxious or overwhelmed at taking on this role, and may struggle with seeing a loved one in pain – so it’s important to be realistic about your expectations, and choose the right person. It may be the best birth partner for you is a close friend or relative.

3. Challenge care recommendations if you aren’t happy

There are likely to be many other options available to you – such as where you might give birth, or how you want to be cared for during labour.

During antenatal appointments be sure to pause, think and ask about benefits, risks and alternatives to the care being proposed. Research shows how important choice and personalised care are for expectant parents who want their voices and preferences to be acknowledged, and to receive consistent advice.

Expectant couple speak with female doctor in doctor's office.
Bringing a loved one or partner with you can make it easier to voice any concerns you may have. wavebreakmedia/ Shutterstock

If you have concerns over a suggestion your care providers have made or have questions, don’t be afraid to ask. Take your birth partner with you if you prefer, who can empower you to ensure your voice is heard. After all, care providers are duty bound to ensure you make fully informed choices.

4. Don’t always listen to your friends and family

Once people hear you have a baby on the way it seems everyone feels the need, without asking, to tell you the full (and often graphic) details of their own children’s birth.

But it’s perfectly acceptable to politely change the subject if you don’t want to listen, or if hearing these stories makes you nervous or worry. It’s also worth remembering that each person has a different labour and birth, even with their own children – so what was true for someone else is likely not to be the same for you. While it can be helpful for some people to debrief after the birth, it’s okay to avoid hearing this yourself if it makes your nervous, and maybe suggest they speak with a professional about their experience instead of telling you.

5. Visit your preferred place of birth

Many maternity units are now opening up their doors again to tours and informal visits – and those that aren’t are doing this virtually.

Becoming familiar with where you might give birth – even down to where you might park on the day – can help you feel more confident about giving birth. It may also remove some of the unknown, helping you regain a sense of control – which in itself is linked to a more positive birth experience.

For those planning a homebirth, speak to your midwife about how you can improve your space to facilitate the most safe and positive experience. For one of the most important days of your life, visualising where this will take place ahead of time can help you feel more confident and in control.

Ultimately, it’s important to remember that no one can predict exactly how your labour and birth journey will go. Even after heeding the above steps – there’s always a chance you may need to consider a plan B, C or even D. But no matter what, remember you’ve done your very best, and you’re not likely to repeat this exact experience the next time.

Claire Parker does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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