In a recent interview penned to Forbes, Jonathan Boyar discusses the odds of U.S. defaulting on its debt and what should the investors do.
Could the stock market correct substantially if the government defaults?
“If a temporary drop in your portfolio of 20%-30% is too much for you to handle, then regardless of the political climate, reducing your equity exposure could free you to make rational decisions while letting you weather a market swoon. The most important thing is not to panic and sell everything if the government defaults and the markets enter freefall. In March 2020, when the coronavirus was raging and equities were plunging, selling stocks was the worst move an investor could have made. The apparent crisis turned into a once-in-a-generation buying opportunity, with many high-quality companies more than doubling their March 2020 panic lows. The best thing investors can do is to keep some cash on the sidelines, positioning themselves to take advantage of market turmoil.”