How to invest in stocks today with the recession coming

 Concerns about the fate of equity markets are well supported by the partial bankruptcy of central bank activities , whose policies to combat super inflation are scarcely tangible, and the outcome of which could plunge the global economy into a recession.

Recall how the Federal Reserve raised interest rates by three-quarters of a percentage point last week - for the largest rate hike since 1994. The Bank of England also raised its target rate, for the fifth time since December. . And the Swiss central bank raised rates for the first time in 15 years.

For its part, the BoE has also admitted that inflation will approach 11% in the fall , and the Fed has just raised its inflation expectations for 2022 by one percentage point. Although Fed Chairman Jerome Powell said last week that there is still a chance the US economy will avoid recession, he also admitted that the Russian invasion of Ukraine, the ongoing pandemic and the difficulties of the chain of supply and energy have increased the degree of difficulty in central bank actions and fueled such great challenges that a recession could certainly not be ruled out.

Now, by withdrawing monetary stimulus for long guaranteed years and putting the focus of monetary policy in reverse, the Federal Reserve and other central banks have created nervousness in investors , which has later vented into the disappointing performance of the international stock market.

Notably, since reaching their all-time high on January 3, US equities have lost 23%. But woe to think that everything is over: US stocks could in fact still have a lot of room to go down, especially if the efforts made to control prices were to send the economy into crisis.

In short, the Fed may be willing to push the economy into a recession to keep inflation under control , and even if this was certainly not the main investor scenario until not too many weeks ago, now things are changing and the market is starting to discount this opportunity.

In the event of a recession, investors know that equity markets are unlikely to be very rewarding. Bear markets during recessions have historically been longer and deeper than bear markets but have not been associated with economic downturns. Since World War II, stocks have fallen 28% in bear markets without recession - and 36% in those during recessions.

Making it even more difficult is the fact that central banks can no longer rely on the tools they have used in past recessions . Traditionally, the Fed and other central banks have lowered rates and added money to the market to buy public debt and stimulate the economy. But even as inflation evolves into a recession, many factors - commodity prices, fuel costs, and supply chain problems - are beyond the control of monetary institutions. Lowering rates could worsen inflation , undoing any price moderation we might get from an economic downturn.

In any case, there are some glimmers of positivity. Most economists predicting a recession expect a much smaller decline than the collapse of the early 1980s. And equities could therefore hold up better than expected if welcome signals arrive from central banks.

Where to trade stocks online

If you want to trade stocks online, the best solution is to use a regulated broker like eToro and Plus500.

eToro

eToro  is certainly  one of the best online brokers out there , allowing you to trade hundreds of stocks around the world with CFDs, without commissions.

Furthermore, the broker is the world leader in  social trading , a valid help not only for novice traders, but for all investors who wish to enhance the investment experience by sharing their ideas with the entire eToro community.

• Regulation
• Platforms
• Minimum deposit
• Advantages : Social trading e 
• Demo account : free and virtual € 100,000 available

Do you want to trade shares on eToro? You can trade directly on the eToro platform with a trading account!

Not sure yet?  Try eToro's platform for free! Not only that, the broker will give you  100,000 virtual euros  to invest with simulations on any asset available on the platform!

Plus500

Plus500  is another of the best online brokers at your disposal. Professional, regulated and reliable, it will allow you to invest in CFDs on shares in a simple and effective way. Among the strengths of the broker we certainly talk about the great offer  of financial assets  on which you  can trade online !

• Regulation
• Platforms : owned by both webtrader and mobile
• Minimum deposit : 100 euros
• Advantages : Large number of financial assets and low spreads.
• Demo account : free and virtual 40,000 euros available.

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