Here’s What to Focus On During the Chaos

QUESTION: I have so many questions in these chaotic times. First, is my portfolio prepared for a recession?

ANSWER: The dreaded “R” word has re-entered the conversation. We worried about it last year, then set those fears aside, and now it’s back in play. While AMG is not projecting a recession, the persistent uncertainty around trade policy has reopened that door, leaving many investors asking: What do I do if it happens?

Before we leap overboard, let’s take a step back and talk about recessions and their impact. Recessions are a normal part of any free market economy. In the United States, the average recession is about 10 months, and if we hit a recession, AMG expects it to be similarly short-lived. While the stock market might decline further, it would likely start recovering before the recession ends.

But is my portfolio prepared for this and an even further decline? In a growing economy, when stocks are climbing, we rely on equity gains while holding fixed income as a rainy-day fund. When markets falter, we draw from the more stable fixed-income portion of the portfolio while allowing our equities the time they need to recover. In other words: With a reasonably diversified portfolio, you already have your recession plan in place.

But will it work this time? This downturn’s causes might be unique, but markets are still markets and the U.S. economy is still the world’s largest and most dynamic. The biggest factor weighing on markets right now isn’t tariffs themselves, but the uncertainty around them. Once there is more clarity, markets can recalibrate expectations, adjust prices and begin to grow again.

What if tariffs are here to stay? Even if current trade policies become the new normal, consumers, businesses and markets adapt. While a quick snap-back to previous levels is unlikely, a gradual, steady recovery is the more realistic—and still positive—expectation.

Can I take advantage of the dip? Many investors ask about “buying the dip” during volatile times. While sharp downturns can sometimes offer attractive entry points, it’s extremely difficult to time these perfectly. A better approach is to gradually average back into equities as conditions stabilize. If a true panic-driven market drop occurs, that’s an opportunity, but your long-term goals can still be met with disciplined, intelligent investing over time.

What should I focus on? Like a seasick sailor, focus on the steady horizon, not the rising and falling waves. Today’s economic and policy storm will pass. With calm, strategic decisions, five years from now you’ll likely look back and wonder why you felt queasy in the first place.