The 1970s oil crisis. The dot-com bubble bursting. The financial panic that led to the Great Recession.
Each major crisis in recent history had unique characteristics that made it particularly painful for those who lived through it. But each also offered lessons and opportunities.
That is the dynamic financial analysts and advisers are trying to navigate as fears of another US recession mount everywhere from the stock market to the housing sector. The economy isn’t officially there yet — and there is still a compelling case that the country could avoid one altogether.
But talk of a recession can become a self-fulfilling prophecy, and another jumbo rate hike from the Federal Reserve on Wednesday could exacerbate those fears. To prepare, investors should start thinking about ways to limit their financial pain and possibly even take advantage of emerging opportunities.
With that in mind, Bloomberg News asked advisers across the country for the biggest mistakes and best moves they made in recessions past, and how those lessons might be applicable today. Their comments have been edited for length and clarity:
Limits to Dip Buying
Mike Silane, managing partner, 21 West Wealth Management
Biggest mistake from the dot-com recession: My biggest mistake early on was continuing to add to equities as the markets declined, and maybe not having the perspective of saying, ‘You don’t want to catch a falling knife.’ It may have been academically correct and in the long term it was the correct move, but in the short term it created more pain for clients beyond what I had experienced before.
Best move from the dot-com recession: I don’t feel like I got caught up in the huge tech bubble. You had to have exposure, you knew that the internet was life-changing, but we avoided a lot of the companies that had no earnings. The good still go down with the bad, and that’s similar to this environment.
Takeaway for today: Like the dot-com era and like today, there are other areas where you can make money more conservatively and you don’t need to speculate. You don’t want to make a big style shift but you can look to value. I’ve also been emphasizing dividends more in this environment.
Stocks You Trust
Chris Grisanti, chief equity strategist, MAI Capital Management