Strategists from Wells Fargo Investment Institute share insights regarding what investors can do to prepare for an eventual bear market.
December 13, 2019
Video Transcript
October 2019 Transcript
How Bull Markets End
Presenter: Paul Christopher, CFA, Head of Global Market Strategy, Wells Fargo Investment Institute
If you’ve ever been caught off guard by rapidly changing weather, you know how important it is to be prepared.
Fortunately for us, meteorologists are constantly monitoring weather conditions, watching for any signs of instability.
We depend on them to keep us prepared whenever a storm is brewing.
[On-screen text: Paul Christopher, Head of Global Market Strategy, Wells Fargo Investment Institute]
Financial markets are not a force of nature like the weather, but just as we want to know when to pack an umbrella, investors want to know when a storm is brewing in the economy and how they should prepare.
Take the current economic expansion as an example.
The sheer length of our current expansion has made many investors increasingly anxious—wondering when the current recovery will end and the next market contraction will begin.
Much like meteorologists, we constantly watch for indicators and warning signals that can predict changes in the markets, and right now the indicators we’re watching don’t suggest it’s time to issue a storm warning.
But rather, we think a storm watch is more appropriate.
A watch usually means conditions are favorable, but there’s no imminent threat.
For investors, this means be prepared for a market downturn, but don’t overreact and let fear tempt you to abandon your long-term investment plan.
[On-screen text: Diversify across markets and types of investments]
We recommend broadening exposure across markets and types of investments—including alternative investments like hedge funds and private capital.
[On-screen text: Use cash as a tool]
Try to use cash as a tool—that is, put cash to work gradually and as market pullbacks create opportunities.
[On-screen text: Know what you own]
And know what you own. Focus on quality companies, and don’t fall for overinflated return expectations.
Unsettled weather is a natural part of the seasonal cycle that we all experience periodically.
And recessions are a natural part of an economic cycle that all investors should expect and plan for accordingly.
So don’t get caught without your umbrella.
[On-screen text: Download our special report]
To find out more about the investment strategies we think investors should use for weathering the storm of an eventual bear market, download our Wells Fargo Investment Institute special report: How Bull Markets End.
Risk Considerations
All investing involves risk including the possible loss of principal. Investors should be aware of, and understand, all risks associated with a particular investment product before investing.
Alternative investments, such as hedge funds and private capital, are not suitable for all investors and are only open to “accredited” or “qualified” investors within the meaning of U.S. securities laws.
General Disclosures
The opinions expressed reflect the judgment of the speaker as of the recording date and are subject to change without notice. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Past performance is no guarantee of future results. Additional information is available upon request.
The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor. This report is not intended to be a client‐specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon.
Wells Fargo Investment Institute, Inc. is a registered investment adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company.
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