(NewsNation) – There’s no way to avoid an economic downturn, says a financial expert – but he said there are ways people can motivate themselves with strategic investment decisions.
Inflation started accelerating last spring as the US and global economies rebounded from the devastating coronavirus recession. But this recovery, fueled by huge injections of government spending and rock-bottom interest rates, has taken businesses by surprise, leading to chronic shipping delays and price spikes due to customer demand.
All of this points to a recession ahead, said David McAlvany, CEO of McAlvany Wealth Management.
“There’s a 50% chance it will happen in a year, it’s a 100% chance it will happen in two years, we can’t avoid a recession,” McAlvany said. “So let’s get over the fear factor and just say, well, what’s the best way to deal with this as individuals? Keep your options open.
Investors need to adjust their portfolios, McAlvany said. Higher inflation comes with higher interest rates, he said, which will affect asset prices.
“Be aware of your bond portfolio, be aware of your stock portfolio,” McAlvany said.
Inflation is at its highest level in 40 years, with prices up 8.5% in March from 12 months earlier. That means there’s a whole generation of investment managers out there who have no experience in the inflation environment, McAlvany said.
“If you’re talking about executives trying to make business decisions, they’re not used to those kinds of numbers,” McAlvany said.
In an environment like this, he said, precious metals, such as gold and silver, have a nice leg up on them.
The Associated Press contributed to this story.