Almost paradoxically, the downturn may have increased the prospects for growth over the next three quarters.
“We’ve become incrementally more positive on the market,” Adam says. “We were projecting the S&P 500 to be at 2,160 in June of next year. This June it was around 2,130; that’s 2 to 3 percent growth. Now it’s closer to 1,900, so you’re talking about 15 percent projected upside. If you have cash on hand, now might be a good time to put it to work. Valuations were at 18.1x, now they’re closer to 16x. They have become fundamentally more attractive this week.”
United’s DeLorenzo has recommended her clients keep at least one year’s worth of expenses as cash on hand in current conditions.
“If the economy takes a turn with interest rates low, we increase the cash on hand to two years known expenses,” DeLorenzo says. “It helps the clients not to panic when they have enough on hand to pay their mother’s in-home nursing care or their child’s education expenses.”