10/29/2019 | Press release | Distributed by Public on 10/29/2019 06:01
Wells Fargo Investment Institute report outlines risk factors and strategies for investors to prepare for a potential downturn
SAN FRANCISCO--(BUSINESS WIRE)--A new report from the Wells Fargo Investment Institute examines the signs investors should watch to understand whether a bear market is on the horizon. The report, titled 'How Bull Markets End: Investment Strategies to Prepare for the Next Downturn,' explores the relationship between equity bear markets - when there's a decline of at least 20% from the highest closing price to the lowest - and economic recessions. It also details predictive indicators worth watching, why this cycle is different from previous ones, and how investors could prepare their portfolios for a potential downturn.
According to the report, the U.S. economic expansion is 126 months old, making it the longest expansion in U.S. recorded history. Simultaneously the S&P 500 Index has sustained the longest bull market on record, gaining nearly 350% on a total return basis as of October 2019.
'The sheer length of our current expansion has investors worrying when the bull market will turn into a bear market. We are persistently watching for cautionary signals that can predict changes in the markets, and right now the indicators we're studying don't suggest it's time to issue a storm watch,' said Darrell Cronk, president of the Wells Fargo Investment Institute and chief investment officer of Wealth and Investment Management at Wells Fargo. 'Still, investors want to know when a storm is brewing in the economy and markets and how they should prepare for it.'
Exuberant investor sentiment, decelerating corporate earnings, changes in equity sector leadership, rising interest rates, and rapid growth in corporate mergers and acquisitions are but a handful of indicators outlined in the report that the Wells Fargo Investment Institute is keeping a pulse on.
Basing decisions on fear of the unknown can diminish longer-term potential returns and financial goals. 'Market volatility typically picks up leading into a downturn, and that alone can naturally cause some anxiety for investors,' said Tracie McMillion, head of global asset allocation strategy for the Wells Fargo Investment Institute. 'Our guidance is to stay invested through the cycles, resist the impulse to react emotionally, and proactively take control of the portfolio to manage risk.'
The report highlights four strategies for investors to adjust their portfolios differently ahead of the next downturn:
For further portfolio positioning guidance, including strategies for investors nearing retirement and those who favor growth orientation, read 'How Bull Markets End: Investment Strategies to Prepare for the Next Downturn.'
About the Wells Fargo Investment Institute
Wells Fargo Investment Institute is a registered investment adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company, providing investment research, strategy, manager research and thought leadership within the Wealth and Investment Management division, with the goal of supplying world-class advice to the company's financial and wealth advisers.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $1.9 trillion in assets. Wells Fargo's vision is to satisfy our customers' financial needs and help them succeed financially. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, investment and mortgage products and services, as well as consumer and commercial finance, through 7,500 locations, more than 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 32 countries and territories to support customers who conduct business in the global economy. With approximately 261,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 29 on Fortune's 2019 rankings of America's largest corporations. News, insights and perspectives from Wells Fargo are also available at Wells Fargo Stories.
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