US possible recession

Hattie627

With all the talk of the US economy likely/possibly/probably entering recession due to the policies being pursued by the current administration, should we be worried about holding US equities? Is a downturn likely?

Probably a simplistic question. Can we avoid anti-you-know-who comments as it's boring. The US electorate made its choice and we can't change that.

masonic

The last thing you want to be doing is becoming worried after a downturn materialises and taking action then. If you are over-exposed to US equities or equities in general, this would be a good time to rebalance. A crash is always coming, it could be years away, or days. You can't time the market, all you can do is invest in line with your own risk tolerance.

El_Torro

It would be naive to think that a US recession wouldn't have global repercussions. US equities might drop further than other equities, or they might not. I don't think anyone can say at this stage. If you want to reduce your exposure to US equities I wouldn't want to dissuade you from that, though I wouldn't got overboard and do something crazy like have no US equities at all. 

Sure, tariffs on goods being imported into the US aren't helping. There are plenty of other problems that aren't unique to the US though. For example the debt crisis is certainly not a problem unique to the US. 

We should always be worried about an imminent stock market crash. We've had some upsets in recent years but the stock market hasn't taken a long term battering since 2008. That's not to say that a big crash isn't just round the corner, although people have been telling me that it's "just round the corner" for at least the last decade.

InvesterJones

Economy != stock market

masonic

InvesterJones said:

Economy != stock market

True, but there is a reasonable correlation between recessions and market declines.

dunstonh

With all the talk of the US economy likely/possibly/probably entering recession due to the policies being pursued by the current administration, should we be worried about holding US equities? Is a downturn likely?

US equities have been underperforming the rest of the world so far in 2025.   (its the lowest of all the main countries/regions)

Crashes are always coming.  You don't know when but they are coming.   Trying to time the market is usually futile as you won't know when to leave and when to go back in, and more often than not, just closing your eyes to it and waiting it out is the best option.

However.....   Market capitalisation of the US has become significant and many people do feel that market cap is going to hurt a lot when the cycle of RoW vs US moves to favour RoW.   It may have already started but we will only know with hindsight.      So, you would not be alone if you reduced your US equities holdings a little.

Eyeful

1. Market crashes are just part of investing.
If you are worried and can not sleep at night, then you have too much in shares.
The solution is simple. Just reduce the amount in shares until you can sleep at night.

2. The USA has had crashes before and recovered, as can be seen by the article below:
 https://www.getrichslowly.org/bull-bear-markets/

Linton

I have kept my US allocation to 40% for several years.  60% or more in any sector, geography etc represents too much of a single point of failure risk for me. What has happened is irrelevent in investing as it is too late to do anything about it, better to invest on a broad and balanced view of what could happen in the long term.