--- title: Here’s the Risky Move Many Investors Made Due to Fear of a Recession description: When recession fears were high, about half of investors took investment-related action, like buying or selling stocks, a new report found. authors: - name: Brenden Rearick role: Reporter url: https://money.com/author/brenden-rearick/ bio: Brenden Rearick is a former news reporter at Money with nearly four years of experience covering investing and other personal finance topics. education: University of Pittsburgh, BA at_money_since: 2023 articles: 133 covers: - Investing - Banking - Career Advice - Credit - Credit Cards - Economy and Politics - Education - Housing - Insurance - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes - Technology former_staff: true editors: - name: Mallika Mitra role: Contributing Editor url: https://money.com/author/mallika-mitra/ bio: Mallika Mitra is a contributing editor for Money, based in Chicago. She has covered investing and retirement for seven years and her work has appeared in CNBC, Bloomberg, Kiplinger, AARP, Barron’s, Bankrate, The Daily Upside, ETF.com, The Bond Buyer, PLANADVISER, PLANSPONSOR and Investopedia. education: Craig Newmark Graduate School of Journalism at CUNY Kalamazoo College at_money_since: 2020 articles: 395 covers: - Investing - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology also_seen_in: - CNBC - Bloomberg - Kiplinger - Barron's - Bankrate - WGN-TV - CBS News Radio - This Morning With Gordon Deal - Everyone's Talkin' Money social: - https://twitter.com/mitra_mallika - https://www.linkedin.com/in/mallika-mitra-4577a386/ published: '2023-08-18T16:54:10.000Z' modified: '2024-01-10T12:58:26.000Z' section: Investing tags: - News - stocks word_count: 593 canonical: https://money.com/investors-changed-plans-due-to-recession-fears/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Photo-illustration of two faces, a stock graph, and a dollar bill.](https://img.money.com/2023/08/News-Half-Investors-Prepared-Recession-Fiddling-Investments.jpg) "Recession" is a scary word in the world of finance, and a powerful one. The threat of a recession alone is apparently enough to push some investors to fiddle with their investment portfolio. A [recent report](https://www.morningstar.com/lp/investors-preparing-for-recession) from investment research company Morningstar details how investors reacted to last year's recession doomsaying. About half of investors polled prepared for a recession they believed was coming by taking investment-related action, like buying or selling stocks. The report highlights a move you should avoid when making important financial decisions: Reacting out of fear of what could happen in the short term. "Although the best advice for many investors tends to be to stay the course and wait out the storm, behavioral biases can make it difficult to do this," authors of the report wrote. The survey of roughly 1,000 pre-retiree U.S. investors in December 2022 showed that 68% of respondents saw a recession on the horizon, and 48% were worried about how this potential recession would impact their financial situations. With recession fears riding high for many investors, about half of respondents took *some* kind of investment-related action, like buying or selling [stocks](https://money.com/how-to-buy-stocks/) or making changes to their financial plans. While 19% bought stocks as a result of recession fears, 13% sold them and 22% updated their financial plans. Nearly 4 in 10 took what Morningstar calls "imprudent actions." What makes an action imprudent, according to Morningstar, is the timing. Cashing out stocks at a time when many experts are saying to keep holding is one such example. It's not that the action itself is an irrational one (there are plenty of circumstances where it's reasonable to cash out your stocks), but rather that the action is timed poorly. Investors who made these "imprudent" decisions tended to be those most worried about a recession. While it may be tempting to get ahead of an economic downturn by making changes to your portfolio, it's usually better to stick to your long-term strategy and carefully consider any changes. "People do not always make the best decisions when they are scared, and a knee-jerk reaction, like trying to time the market during volatility, can be costly to investors in the long run," the authors of the Morningstar report wrote. After all, a [recession is looking less likely](https://money.com/recession-chances-changing-economists/) than it was back in December 2022, meaning that those who messed with their investments based on fear may have done so unnecessarily. ## The bottom line Ultimately, the report demonstrates common investor behavior: the temptation to shuffle around investments when you're scared. Investors carried what was, at the time, a reasonable amount of fear of a coming recession. And to be clear, it's not always bad to make changes to your portfolio, especially if you see legitimate evidence of trouble on the horizon that may mean your portfolio will stray from being aligned with your goals, time horizon and risk tolerance. However, making *rash* decisions can cost you. Investors who are quick to make changes to their portfolios face the risk of missing out on the market's best days. [JP Morgan's 2023 retirement report](https://am.jpmorgan.com/us/en/asset-management/institutional/insights/retirement-insights/guide-to-retirement/), for example, shows that investors who missed just 10 of the [S&P 500](https://money.com/how-to-invest-in-sp500/)'s best days between 2003 and 2022 saw less than half of the returns compared to investors who kept their money in the market. [When Will the Fed Finally Start Cutting Interest Rates?](https://money.com/when-will-the-fed-start-cutting-interest-rates/) [Millennials and Gen Zers Are Losing Sleep Due to Financial Anxiety](https://money.com/millennials-genz-financial-anxiety/) [As Credit Card Debt Hits $1 Trillion, Here Are 5 Ways to Pay off Your Balance](https://money.com/pay-off-credit-card-debt-1-trillion/) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/investors-changed-plans-due-to-recession-fears/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Investing", "item": "https://money.com/investing/" }, { "@type": "ListItem", "position": 3, "name": "Stock Market", "item": "https://money.com/stock-market/" }, { "@type": "ListItem", "position": 4, "name": "Here’s the Risky Move Many Investors Made Due to Fear of a Recession" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/investors-changed-plans-due-to-recession-fears/#webpage", "url": "https://money.com/investors-changed-plans-due-to-recession-fears/", "name": "Here’s the Risky Move Many Investors Made Due to Fear of a Recession", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2023-08-18T16:54:10.000Z", "mainEntity": { "@id": "https://money.com/investors-changed-plans-due-to-recession-fears/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/investors-changed-plans-due-to-recession-fears/#breadcrumb" }, "dateModified": "2024-01-10T12:58:26.000Z" }, { "@type": "NewsArticle", "headline": "Here’s the Risky Move Many Investors Made Due to Fear of a Recession", "articleSection": "Investing", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2023/08/News-Half-Investors-Prepared-Recession-Fiddling-Investments.jpg", "width": 2880, "height": 1920, "caption": "News-Half-Investors-Prepared-Recession-Fiddling-Investments" } ], "author": [ { "@type": "Person", "name": "Brenden Rearick", "url": "https://money.com/author/brenden-rearick/", "@id": "https://money.com/author/brenden-rearick/#author", "description": "Brenden Rearick is a former news reporter at Money with nearly four years of experience covering investing and other personal finance topics.\r\n\r\n", "email": "brenden.rearick@money.com", "alumniOf": "University of Pittsburgh, BA" } ], "publisher": "https://money.com/#organization", "datePublished": "2023-08-18T16:54:10.000Z", "description": "When recession fears were high, about half of investors took investment-related action, like buying or selling stocks, a new report found.", "abstract": "When recession fears were high, about half of investors took investment-related action, like buying or selling stocks, a new report found.", "@id": "https://money.com/investors-changed-plans-due-to-recession-fears/", "inLanguage": "en-US", "dateModified": "2024-01-10T12:58:26.000Z", "editor": [ { "@type": "Person", "name": "Mallika Mitra", "url": "https://money.com/author/mallika-mitra/", "@id": "https://money.com/author/mallika-mitra/#author", "description": "Mallika Mitra is a contributing editor for Money, based in Chicago. 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