Bankrate: Another Recession Is Inevitable. Here’s What This Savvy Investor Learned From The Last One

By Kelly Anne Smith

WWR Article Summary (tl;dr) Keith Lockyer, investment market manager at PNC Wealth Management offers three financial tips to help prepare for the next market downturn.

Eric Luehmann was 29 when the last recession rolled in like a tidal wave. He can’t remember the exact moment when he realized that the stock market was crashing in 2008, but he recalls watching stock market tickers sliding.

As an accountant who studied financial basics in school, he knew a bear market was inevitable; he just didn’t know when it was going to happen.

The financial meltdown, one of the worst crises in American history, scorched everything in its path, from stocks to bonds to the housing market and all sorts of financial instruments most Americans had never heard of.

The unemployment rate peaked at 10 percent. Struggling with job loss and underwater mortgages, millions of homeowners defaulted on their mortgages; nine million homes went into foreclosure.

Unbounded optimism was replaced by panic. The Consumer Confidence Index plunged to an all-time low of 25 in February of 2009. It’s estimated that 401(k)s and IRAs lost around $2.4 trillion in the last half of 2008.

Many people panicked and cashed out their investments, hoping to retain whatever they had left.

Staying in the game when the market gets rough
Almost 10 years later, Luehmann still has a screenshot of his Fidelity account. Taken on Wednesday, October 28, 2008, it shows his personal rate of return from January 1, 2008 to October 28, 2008: -46.6 percent.

The figure is circled in black. In all caps, “NICE!!!” is written next to the circle in large font; it’s a rueful ode to the loss many investors confronted.

But the carnage in Luehmann’s account didn’t prompt him to pull out of the market.

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