The looming coronavirus pandemic is causing incredible uncertainty in the stock market, and it’s leading toward a recession, according to one financial expert.
David Spika, chief strategic investment officer of GuideStone, told the Baptist Press this week that much of that uncertainty stems from the fact that “we don’t know what we don’t know.”
“We’re likely to go into a recession this year,” he said. “A recession is defined as two consecutive quarters of negative GDP growth. It’s gonna have the biggest impact, from a business perspective, on anybody in the travel and leisure segments … and then small businesses.”
While there’s no doubt the coming days, weeks, and potentially months will be difficult, Spika said people should be encouraged by the fact that the market “is already pricing that in.”
“The good news is, once we get to a point where we have some way to project the future, and we feel good about when the economy will recover, stocks will start to price that in,” he explained. “That could happen as soon as sometime in the next couple of months, if we think there’s gonna be a recovery in the economy in the fourth quarter.”
For those who are — or were — about to retire, Spika said there is some danger in pulling out of the stock market today.
Historically, recessions last between 12 and 13 months and, assuming this downturn ultimately proves to be an average bear market, then “we’ve already incurred most of the losses.”
“And when the recovery happens,” Spika said, “stocks are gonna go back up, and if you take your money out of the stock market today, you’re gonna miss that rebound in the markets.”
With that in mind, Spika said he would advise against making any major changes until there is a level of certainty in the stock markets.
Watch the video above to hear more of Spika’s financial advice during this coronavirus pandemic.