Should You Keep Investing in Stocks in Today’s Tumultuous Market?
Written by
G. Brian Davis
Edited by
Jenna Klaverweiden
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The U.S. stock market faces real risks in 2025, from tariffs and trade wars to regulatory changes and recession risk. In May, J.P. Morgan put the probability of a recession in 2025 at 40%.
But does that mean investors should panic-sell their stock portfolio? Of course not. Finance professor Robert Johnson, Ph.D., at Creighton University urged investors never to try to time the market. “There is always a reason not to invest — whether it be COVID-19, Brexit, unpredictable tariffs, the latest presidential tweet or tensions in the Middle East,” he said.
Sometimes a course adjustment can make sense, however. Consider the following options to defend against today’s tumultuous stock market.
Assess Your Needs and Timeline
If you might need cash within the next year or two, for major purchases like a house or repairs, consider setting aside that cash now.
But if you’re investing long term for retirement, ignore today’s volatility in the stock market.
Beef Up Defensive Positions
No one says your asset allocation has to stay exactly the same if you feel uncomfortable.
“Retail investors can move some money from higher-risk stocks to lower risk sectors,” noted professional investor Vince Stanzione, author of “The Millionaire Dropout.” “We are buying gold mining stocks, the best-performing sector so far this year with the Gold Miners ETF GDX up 70%.”
Diversify Outside the US
Sure, U.S. stocks and government regulations have gyrated this year. However, Julia Khandoshko of European brokerage Mind Money reminds Americans that the U.S. is only one country in a big world.
“Invest in countries with stable policies, stable economies and transparent regulation for investments, such as Great Britain or the United Arab Emirates,” she said. For that matter, you can invest in index funds that include entire regions, or a fund like the Vanguard FTSE All-World ex-US ETF (VEU) that owns stocks everywhere except the U.S.
Consider Adding Real Estate Investments
When retail investors say “equities,” they typically think of stocks. But you can also make equity investments in real estate without the hassles of becoming a landlord.
One option is real estate investment trusts (REITs), which you can buy and sell like stocks through your brokerage accounts. They tend to pay high dividend yields, with less volatility than stocks.
Alternatively, you can enjoy the full cash flow, appreciation and tax benefits of owning real estate through syndications. “In a syndication, you invest in a large property such as an apartment complex, managed by a real estate professional,” explained Michael Margarella of Next Play Investments. “You receive equity in the property and a share of the profits generated, for both passive income and tax benefits.”
Beyond diversifying your portfolio, real estate serves as a hedge against inflation, as rents typically adjust alongside it.
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