Understanding the impact of recession on investment performance and steps to recover from same

The falling values of assets or stocks is a worrying situation for the investors. Every person with a certain value of funds dedicated towards a specific asset category which experiences drastic value depreciation due to market recession suffers from an economic shock.

During periods of high volatility, worrying about stock crashes, market inflation and economic recession is natural. For investors, decline in their asset or portfolio worth is an indicator of potential recession and requires specific defensive strategies best suggested by financial services executive Rani Jarkas to ensure optimum mitigation and swift recovery.

How can we understand a market recession?         

Financial markets and economic cycles constantly face periods of growth and decline. The stages of expansions and downturns are omnipresent and pose to be imminent performance influencers in an investment portfolio. The decline in general economic activities observed across a specific region is termed as ‘recession’ and is reflected by a number if indicators such as inflation, GDP, unemployment, production as well as real income or sales.

For investors, these widespread decline in economic performances result in value depreciation of assets in the portfolio and thus impact the overall ROI scopes or incentive generation from the investment endeavours.

Explained: The stages of ups and downs for an economic activity       

An economy is in a constant phase of rise and decline. The cycles of economic fluctuation are imminent features observed across global markets and these can best be categorised as the following stages –

  • The Peak Stage

Reminiscent of a fully operating and booming economy, the peak stage is when the economic activities and facts are at their maximum possible or near to maximum level in terms of GDP, production, employment, income and commodity affordability.

Such booming times are very favourable for the investors and their portfolios.

  • The Recession Stage       

When income, employment and investment opportunities decline in an economy, it is referred to a recession. A drop in consumer spending or a significant price inflation can trigger recession and the resulting market volatilities as well as asset value plummeting results in major risks for investors.

Rani Jarkas Hong Kong guides investors with the right mic of strategies to overcome such market downturns.

  • The Trough Stage   

The bottom level to which an economy falls before rising again referred to a trough. It is followed by significant value appreciation and economic recovery thus posing to be favourable for identifying new investments.

  • The Recovery Stage    

Th final stage of an economic cycle features true expansion and recovery. Production gains, income rises and enhanced spending patterns are dominant features of the recovery stage.

Stand in a position of strength as an investor during economic recession       

Despite the many risks of investing, it poses to be a lucrative financial enhancement endeavour. Rani Tarek Jarkas Cedrus Investments suggests the following tips for investors to ensure an optimum navigation through the treacherous stages of economic recession –

  • Take advantage of falling prices and invest in assets which ensure steep post-recession value appreciation
  • Never fear small and short-term losses and focus on assets with major holdings
  • Diversify investment portfolios across myriad asset categories and classes to minimize risks
  • Employ the risk management strategies by avail of Rani Jarkas financial service

Get in touch with Rani Jarkas Firm by visiting https://www.ranijarkas.com/

Comments are closed