(NewsNation) — There’s no way to avoid an economic downturn, according to one financial expert — but he said there are ways people can buoy themselves with strategic investment decisions.
Inflation began to accelerate last spring, as the U.S. and global economies rebounded from the devastating coronavirus recession. But this recovery, fueled by huge infusions of government spending and super-low interest rates, caught businesses by surprise, leading to chronic shipping delays and price spikes due to customer demand.
This all points to a recession coming down the pipeline, David McAlvany, CEO of McAlvany Wealth Management, said.
“It’s a 50% chance that it happens in one year, it’s a 100% chance that it happens in two years, we cannot avoid a recession,” McAlvany said. “So let’s get over the fear factor and just say, well, what’s the best way to navigate that as individuals? Keep your options open.”
Investors need to adjust their portfolios, McAlvany said. With higher inflation comes 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 the highest point it’s been for 40 years, with prices shooting up by 8.5% in March compared to 12 months earlier. This means there’s an entire generation of investment managers who have no experience in the context of inflation, McAlvany said.
“If you’re talking about executives who are trying to make business decisions, they’re not accustomed to these kinds of numbers,” McAlvany said.
In an environment like this, he said, precious metals, such as gold and silver, have a great run ahead of them.
The Associated Press contributed to this story.