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Fear of Recession Grows Amongst Investors




Today, we are talking about Fear.


Yes...Fear.


Fear is defined as an unpleasant emotion caused by the belief that someone or something is dangerous, likely to cause pain, or a threat. Now, this is the denotation. Or the dictionary definition of the word. And in this definition, we see the word, BELIEF.


Belief is defined in two ways, acceptance that a statement is true, or that something exists and a trust, faith, or confidence in someone or something. It is important to understand this.

Because if fear is the belief that someone or something is dangerous or a threat, then that means that there is an acceptance that, whatever is causing that uncomfortable feeling of fear, is true and exists.


Now stay with me.


If you are afraid of the market, what belief do you have about the threat? And what is dangerous about it?


I want you to hold onto the answers to those two questions because at the end of the post. I am going to ask you those same questions and see if your answer changes.


But first. Let’s go to our biblical principle on which this episode is going to be based on.


It comes from II Timothy 1:7- For God gave us a spirit not of fear but of power and love and self-control.


And we are going to lean on this verse as we discuss the recent market volatility.


The first half of the year has been a rough one. I know. But there is a silver lining to every thundercloud, isn’t it? The one I am thinking of is the heightened interest in investments and what is the best course of action.


When the markets are good, people tend to ignore them, they are not interested in what is a bear market, or what is a bull market. When you talk about asset allocation and rebalancing their eyes gloss over.


But when the markets are volatile and there is a threat of a recession, the one word they remembered in Economics class…all of a sudden…they are open to new information.




That is why you are probably here. And this is a great opportunity while we have your attention, for financial professionals like myself to provide solid information to help alleviate you of your fears or the belief in things that do not exist.


Are you still with me?


We are just getting to the good stuff now.


So we talked about fear and how God has not given us a spirit of fear but of love and self-control. And these two gifts, love and self-control are going to be the driving force behind our decision-making.


A majority of investors lose their sense of self-control when the markets are volatile. They start to panic sell. What is Panic Selling? It is when the markets are going down, they get scared and convert all of their assets to cash.


They lose focus on the long-term goal and direct all of their focus on the short term.

Do we want to just sit and do nothing? No.


We should do something.


Rebalancing is at the core of what a financial planner does. Making sure that your risk tolerance matches with your asset allocation which in turn aligns with your long-term investment goals. But if your risk tolerance is skewed from fear, you panic sell, which throws off your asset allocation, and now you may put your long-term investment goals at risk. You see how that works?


Besides rebalancing the article it states that a second crucial part of making rebalancing work is to stay diversified, said Omar Aguilar, CEO and CIO at Schwab Asset Management.


“Most likely, the risk that you thought you had in your portfolio has now changed,” “Rebalancing to the risk profile that fits you and your clients is a critical part of the next phase.”
Admittedly, that next phase may pose challenges, including a heightened recession risk, according to Sébastien Page, head of global multi-asset and CIO at T. Rowe Price.

And they are right!


Around 10 of the last 13 rate hike cycles since World War II have ended in a recession, so as far as if we are heading into a recession…I can’t predict the future, but let’s just say that history is not on our side when it comes to that.


So what is the first thing we think about when the market is going down? Correlation right? If you didn’t say correlation don’t worry, only financial advisors would have said that. But correlation is what most people professional would think about.


If the market is going down, let’s reallocate to assets that are not correlated with the market and get some protection.


Sounds good but…that is not necessarily how that works.


Market correlation simply means a statistical measure that expresses the extent to which two variables are linearly related (meaning they change together at a constant rate). So just because an asset is not correlated with the market, doesn’t mean it is going to perform better than the market. Especially if we are talking about short-term volatility.


Some may think that cash is the answer. Just park the funds. But when inflation is at around 8% back in May, that is not a good long-term strategy either.


There is a financial taboo that I want to share with you. If you don’t remember anything from this episode, I want you to remember this.


“Don’t invest long-term money in short-term vehicles, and don’t invest short-term money in long-term vehicles”

Over weighting, your portfolio in short-term vehicles is putting your assets at more risk than you may FEEL you are protecting yourself from. So looking beyond the traditional 60/40 split is going to be crucial because now we need to look at asset classes and make sure we understand why we are holding them. From equities, fixed-income, cash and cash equivlents. We have to mention cryptocurrency because people hold these classes in their portfolio and if they are there, they need to be understood.


Remember those 2 questions I had you hold on to?


If not, here they are again.


If you are afraid of the market, what belief do you have about the threat? And what is dangerous about it?


So the first answer may be that the threat of a recession is here. And I want to let you know that there have been about 11 recessions since 1948, which means there is about a 1 to 6 ratio of recession to expansion. For every 1 year we have a recession, we have 6 years of growth.


So tell me, why are we fearing a recession when they don’t have a long-term effect on our long-term goals?




The only thing a recession affects is our short-term strategy for money management. That is to say, withdrawal rates, generating cash flow, and funding short-term projects, all while trying to reduce tax implications.


But this is not something to be afraid of. It is this belief that the world is coming to an end, when really a recession is just a signal that we need to make some slight short-term adjustments as we realign our expectations going forward.


Questions number 2- What is dangerous about this threat?


The dangerous part is not being aware of the changes that are going on. They say in boxing that the hardest hit is the one you don’t see.




Burying our heads in the sand and hoping that the recession goes away is not a strategy. As we mentioned earlier, panicking and selling everything is not a strategy.


The best strategy is the one from our Lord when it says we should have a spirit of love and self-control. We need to be disciplined during this time, that is how we are going to overcome.

If you need help with your financial situation and need to plan, be sure to reach out to us by going to our website. www.abrwealthmanagement.com and schedule a consultation. We will have more booking and contact information at the bottom of this post.


Be sure to like this post and comment below what you will do differently after reading this blog post. And afterwards head over to our merchandise store and pick up a shirt so everyone knows that as a Christian, your faith and your finances are not separate.


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About the podcast:


Many Christians struggle with the seemingly conflicting views about our faith and the pursuit of financial gain. They were taught that poverty was piety and that a lack of money was the only way to truly detach themselves from the love of money. Our podcast debunks some of those claims, teaches you that you can be rich and righteous, and at the same time fulfill your obligation to tithe and give to the less fortunate. We are dedicated to helping you become cheerful givers by organizing your personal finances, providing investment tips to help you create wealth, and encouraging you to create a gifting strategy that will make your family and God proud.


Meet the Host:



A.B. Ridgeway, MBA (info@abrwealthmanagement.com) is the owner and Christian Financial Advisor with A.B. Ridgeway Wealth Management. With a decade in the finance industry, his goal is to give believers clarity around the most confusing topic in the Bible, money, and tithing. A.B. Ridgeway helps tithing Christians become cheerful givers but unlocking their money-making potential, so they can prosper and be the great stewards of the wealth God has entrusted them with.


This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy or the completeness of any description of securities, markets or developments mentioned. This is strictly for information purposes. We recommend you speak with a professional financial advisor.


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