A global recession is coming in 2023 and you should act now to protect your investments, warns the CEO of one of the world’s largest independent financial advisory, asset management and fintech organisations.
Nigel Green of deVere Group is speaking out as a growing number of institutions and investors sound the alarm.
He says: “In recent weeks the chorus of warnings about an imminent global recession has been getting ever louder.
“From the World Bank, the World Trade Organization, and the World Economic Forum, to the IMF and even Elon Musk, the consensus is growing that the world economy will fall into recession in 2023.”
There are various signs that are indicating a global recession is on its way.
“The strength of the dollar is one major indicator. It’s seen as a safe haven in turbulent times for investors. However, it also creates major issues for most other countries as it becomes more expensive to import.
“In addition, a strong dollar can be bad for Wall Street as many listed firms earn a good chunk of their profits outside the U.S,” says the deVere CEO.
“Inflation is another. As it continues to run red-hot, households and firms have less money to spend on goods and services. Financial habits are adjusted and downsized, which drags on economic growth throughout the wider economy.
“Also, corporations around the world are tightening their belts and suggesting earnings will be lower, as demand drops, supply chain issues remain, and borrowing gets more expensive as central banks, determined to control inflation, raise interest rates.”
How to protect your portfolio during a global recession?
“There will be opportunities not only to protect but to grow your wealth, despite a recession,” affirms Nigel Green. “You’ve just got to be extra savvy.”
As the risks of a global recession ramp up, there remains one clear way for investors to maximise returns relative to risk: the time-honoured practice of portfolio diversification.
“A considered mix of asset classes, sectors, regions and currencies offers you protection from shocks. A good fund manager will help you sidestep potential risks.”
He continues: “You should take a look at stocks that are likely to be recession-resistant. For example, people will still need food, energy and financial services during a downturn. These sectors should do well.
“Seek out more undervalued, quality stocks – look for robust balance sheets, good future-focused outlooks and steady profits.
“In addition, in an environment of rising inflation and interest rates, less familiar, return-enhancing asset classes should also be considered.”
These might include venture capital, structured products, cryptocurrencies, high-dividend stocks, hedge funds and managed futures.
The deVere CEO concludes: “Recessions are always painful – and a global one is expected to come next year.
“But they can also be times of opportunity if you stay fully and wisely invested.
“One silver lining about this one is that we know it’s coming, so we can prepare to protect our money ahead of time.”