Yahoo Finance ‘Ramsey Show’ Host George Kamel: 4 Things To Do If the Stock Market Dips
George Kamel is the co-host of “The Ramsey Show” and “Smart Money Happy Hour.” In a recent YouTube video, the financial expert discussed the current state of the U.S. stock market and how investors should act during any future corrections or bear markets.
Read: I’m a Self-Made Millionaire: 5 Stocks You Shouldn’t Sell
Discover: 6 Genius Things All Wealthy People Do With Their Money
In four simple steps, Kamel outlined how investors can get through any market volatility and actually end up better off on the other side. Here are Kamel’s recommendations, following a brief look at what causes stock market crashes to begin with and how they’ve historically recovered.
Sponsored: Owe the IRS $10K or more? Schedule a FREE consultation to see if you qualify for tax relief.
The Current Economic Environment
Kamel says there are four main things on the mind of the market right now, each of which can affect how prices will react. These are:
Inflation
Interest rates
The potential for a recession
Big tech
Inflation and interest rates go somewhat hand in hand. As inflation rises, the Federal Reserve raises interest rates to restrain growth and contain inflation. Both high inflation and high interest rates can have a devastating effect on the economy, as they result in reduced spending by both businesses and consumers. This lowers corporate earnings, which in turn drops stock prices.
But there’s good news on both fronts, according to Kamel. As of June 30, 2023, inflation had already fallen back to just 3%, indicating that the Fed’s moves are having a positive impact. Meanwhile, the Fed itself has indicated that it will be lowering interest rates in 2024, making loans of all types more affordable for both businesses and individuals.
Related: 10 Valuable Stocks That Could Be the Next Apple or Amazon
The potential for recession has been another fear in the stock market, but as Kamel states, it’s looking more like America’s going to get a soft landing out of the Fed’s actions. Investors have been concerned about a recession, but Kamel feels that it’s now a big “nothing burger.”
One area of potential real concern is the economy’s reliance on big tech. With artificial intelligence and technology in general taking center stage in the economy, Kamel likens the situation to putting all of your eggs in one basket. If big tech starts to slip, it could have some real market ramifications.
Overall, though, Kamel believes the stock market waters seem relatively calm for now.
What If There Is a Market Crash?
Historically speaking, market crashes aren’t anything for long-term investors to fear. Kamel stresses that investors should try to keep a level head simply based on how the stock market traditionally reacts after a selloff — it doesn’t stay down over the long run.
In 1987, for example, the stock market lost more than 22% in a single day. However, within two years, it had recovered everything. In 2001, the market dropped 7% on 9/11 alone, but within a single month, it had returned to 9/10 levels, going on to continue rising thereafter. The pattern repeats itself over and over, with the market always going on to make new all-time highs no matter how big the initial selloff.
For this reason, Kamel says that if the market does crash overnight, here is what you should do.
Refuse To Panic
As Kamel hammers home to his audience, historically speaking, the stock market always comes back. For this reason, you can’t let emotions affect you when there’s a temporary correction or bear market.
Kamel urges listeners to keep the big picture in mind, regardless of day-to-day returns. Trust the history and don’t look at your account statements too often during these times. Rather, stick to your long-term investment plan.
If You’re Invested, Stay Invested
At all costs, do not sell if the market has tumbled. According to the historical record, there’s an exceedingly high chance that if you stay the course, you’ll earn all of your money back and then some. So if you take your money out, you suddenly make that loss permanent. The damage is done, and you’ll never get that money back.
You also run the very high risk of not knowing when to get back in to capture the future upside, which means you’ll be taking a loss and missing out on the ensuring gains. That’s a recipe for disaster in the investment world.
Work With an Investment Professional
It can be tough to “stay the course” when all you see in your portfolio is falling prices. This is one of the reasons that Kamel says everyone should work with an investment professional.
Kamel notes that even he and his boss, famed financial personality Dave Ramsey, each work with their own investment advisors, and so should you. When the market shifts, it’s a great time to talk to your pro. They will talk you through it and give you personalized advice about how to stick with your investment plan.
Consider Buying the Dip
One final bit of advice that Kamel gives his audience is that if it’s possible, they should consider buying the dip when the market goes down. Since the market always bounces back, when it dips, it simply means the market is on sale, and you can pick up additional shares at bargain prices.
The financial expert does offer one caveat to this piece of advice, however. If you’re not in a good financial position, like if you recently lost your job, it makes more sense to focus on the basics until you get back on your feet. But if you have capital or are in a good financial position, taking advantage of market corrections can actually accelerate your long-term wealth-building.
More From GOBankingRates
I'm a Bank Teller: Here Are 10 Mistakes You Are Making With Your Banking
Use This Checklist To See Whether Your Bank is Costing You a Lot of Money
One Strategy Everyone With a Credit Card Balance Should Consider
This article originally appeared on GOBankingRates.com: ‘Ramsey Show’ Host George Kamel: 4 Things To Do If the Stock Market Dips
