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EXPERT: Dow Drop Does Not Guarantee a Recession

Financial consultant Nicholas Royer says a recession is not expected. The Dow Jones Industrial average dropped by 800 points on Wednesday after Wall Street noticed a sign that has been linked to the start of a recession. It deals with US Treasury bonds.

These types of bonds are basically a loan from an individual or a group to the government. The original loaner gets paid interest and after an agreed amount of time, the loaner gets paid back in full.

What worried Wall Street was that right now, short term bonds are making more money than long term bonds, which is not typical. This has happened before several major recessions, but Royer says other factors need to be considered when predicting a recession.

“With an economy going good, with inflation being stable, the signs are showing this could be just a nothing type of situation,” said Royer.

Royer recommends diversifying, invest in the market, but save some money too.

“You should still have money that does have risk along with money that doesn’t have risk so if the market does go into recession, you have some money that is protected.”

Even if you don’t invest your money, it’s possible your retirement accounts are tied up in stocks or bonds. So remember to keep a close eye on your accounts and know how your money is being used.

 

Andy Weber

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