One of my political heroes, Franklin Delano Roosevelt, declared in his first presidential inaugural address in 1933: “The only thing we have to fear is fear itself.” That was during the darkest days of the Great Depression.

Likewise, one of your worst enemies right now is fear. There’s increasing talk on Wall Street about an imminent recession, as rising interest rates and war-induced supply chain disruptions dampen economic growth. Accordingly, the stock market has been slumping.

Fact is, dumping stocks because you’re worried about deteriorating economic conditions locks in your losses. And when the herd panics, broader conditions worsen. As FDR famously warned Americans nearly a century ago, unreasoning fear can become a self-fulfilling prophesy.

Through their emails to us, readers have been weighing in on how they feel about the risk of a recession and what steps they are taking, if any, to prepare for it. Here’s a representative sampling of their letters, which investors of all types should find useful.

Letters to the Editor

“I’m going slow. Writing call options on some holdings and a couple of put options. I feel that there are some really great companies I want to buy.” — Denny M.

“I’ve been building cash for the last few years; I hope to deploy more of it in the coming months. Meanwhile, in the last few months, I have sold a lot of covered calls and last week extremely low-ball puts.” — Tim H.

“Last year, to get set for the oncoming carnage, I rearranged my portfolio to eliminate most bonds plus stocks with higher risk. I bought utilities, gold stocks, and more stable large dividend-paying stocks. When I completed the re-balance, I decided it was best to only watch. My equities may lose value but eventually they will regain some or all value. Once inflation has caused cash to lose value, that value is gone for good.” — Rey

“My biggest concern is when the Fed gets finished unloading the billions of dollars on its balance sheet. Of course, raising interest rates by the Fed will negatively affect businesses. But a recession? I don’t see it yet. What a challenge investing is right now. Only time will tell us the answer.” — Kenneth H.

“I am an aggressive investor and will continue to be for the foreseeable future. The market will eventually recover. However, I have shifted some of my portfolio into higher dividend yields and more conservative investments such as utilities and commodities over the past year. I also am taking advantage of higher yields on bank CDs, which are now paying as much as decent dividend stocks with no risk.” — Wayne C.

“I’m not worried about recession and remain 99% invested in common stocks. My hedges represent a high percentage of the portfolio though, so I’m overweight energy and miners. I basically hold no cash, except in my personal checking account where I’m good for a few months. Everything else is BDCs and other high-yielding and health care REITs.” — Andy H.

“I believe we will have slowly rising interest rates and a slowing economy. I am overweight in stocks, mainly utilities, pharma and energy, and I’m raising cash waiting for higher yielding bonds and/or lower-priced quality dividend-paying stocks.” — Dr. Lawrence N.

“I thought people should have a ‘rainy day’ account for times like this. I have no sympathy for the American people. They can’t live within their means and can’t stop buying things.” — Donald B.

“I believe we are in a recession now. Gas and food prices are high. Companies are starting to add additional costs to their billings because of fuel and inflation. I have informed my wife that for the next year or two, we’re cutting spending.” — Stan Z.

“Inflation is rising, equities are getting crushed, and TIPS are falling both today and over the last three months. One might think TIPS should be rising with inflation. Perhaps TIPS are falling because fixed income investors believe interest rates will be raised aggressively and thus inflation will not stay high. Sustained high rates will wreak havoc with equities.” — Steven B.

“A recession is coming. The stock market is in La-La Land. I am buying gold bars and ETFs.” — Jim M.

Got any questions, comments or suggestions? Send me an email: mailbag@investingdaily.com. As warranted, I edit letters for the sake of clarity and concision (but I do so with a light touch).

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John Persinos is the editorial director of Investing Daily.

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