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Investment & Finance

A Recession Is Not a Setback, but an Opportunity

By
Jessica Cutter
Updated
December 4, 2023
5 minute read
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Is every news and media station predicting a recession for attention, or do all the events and fluctuations indicate something will happen? Fear, the typical emotion on the market, takes hold of investors, regardless of the legitimacy of a recession. Instead of acting out based on an irrational thought process, it’s time to understand why fear is the setback, not the recession. 

Fearful Actions Are Setbacks, Not Recessions 

Investors aren’t at the mercy of the market during a downturn; there is a plethora of strategies to implement, but unfortunately, they’re often left unconsidered. A helpless state is often assumed when the bear (bear market) starts approaching, and an emotional investment follows. 

These fear-driven responses during a recession cause more issues than they solve; 

  • Failure to Reassess Goals 
  • Panic Selling 
  • Ruining a Diversified Portfolio
  • Waiting to Invest
  • High-Risk Investments 

It’s doubtful that the average investor thinks, “I would love to ruin my diversified portfolio because of my tunnel vision from fear, so let me sell all my assets and then decide not to buy anything because I don’t want any returns.” However, that’s precisely what he/she commits to when the climate gets in his/her head. 

Instead of falling into that trap, it’s time to remember the big picture. 

Prevent Fear Through Understanding 

Recessions always turn around. The emotional decisions that end up being a setback do not consider this factor. The U.S. has always come out of every recession it has experienced. Remember that, along with these critical factors;

  • Recessions are a normal part of the economic cycle.
  • Recessions create opportunities for new businesses. 
  • Recessions encourage legal and technological advances (ex. SEC).
  • Recessions are the best times to buy high-value stocks for low prices. 

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Find Opportunity Through Reframing 

If an investor’s mind immediately thinks about all the loss, it’s a gut reaction, but at the same time, cheap valuations of valuable assets mean an opportunity.   

How do I reframe my mindset? Reflecting on how you’ve approached these events before and then considering how to benefit from them in the future. 

Old mindset: Letting fear fuel your focus to be only on the present and all the potential losses during a downturn. 

New Mindset: Adapting strategies to poor conditions through rebalancing and long-term decisions, then when the moment strikes, you’ll be positioned to capitalize on significant market booms early on.

alphaAI Assists Investors in Recessions 

If you’re concerned that you can’t help but panic during downturns but still want to capitalize off of the circumstances, use alphaAI! The innovative machine learning (ML) technology will defend, protect, and capitalize on market opportunities during downturns. The AI incorporates Defense Mode into every strategy to protect your portfolio. 

What is defense mode? Under poor market conditions, your portfolio switches to Defense mode to focus on capital preservation.

Essentially, defense mode evaluates market conditions, considers your financial goals/criteria, and preserves your capital so you don’t get set back during a downturn. 

The AI technology utilizes several decades of data spanning over 10,000 global stocks. It picks up on patterns, performs with predictive capabilities, and uses multiple models (a single model has over 10 billion data points) to make decisions. It is never based on the news, panic, fear, or emotions. 

Takeaways 

Don’t let fear cause you to sell in a frenzy and lose potential gains; use the objective data-backed approach with alphaAI, which will adjust your portfolio automatically to poor conditions to achieve your financial goals. 

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