Suze Orman Says the Stock Market Isn't in Recovery Mode. Here's What You Need to Know

We could, in fact, be in for many more months of volatility.

It's fair to say that 2022 has been a tough year for investors -- both newbies and seasoned ones alike. The year started off rocky from a stock market perspective, and while stocks did manage to rally a bit over the summer, that upswing was followed by another downward dip as inflation, interest rate hikes, and recession fears all came to a head.

In a recent podcast, financial guru Suze Orman made a point to emphasize that the stock market is not, in fact, in recovery mode. Now when she made that statement, stocks may have been showing more signs of a recovery. But Orman doesn't want investors to let down their guard. And so it pays to be realistic about the fact that stocks could remain volatile for quite some time.

We could be in for many more months of turbulence

There are different reasons why the stock market has been taking investors on a wild ride. Economic news tends to influence stock market movement so that when there's lots of uncertainty, stock values can fall.

Meanwhile, we're grappling with some pretty uncertain times. Not only is inflation still soaring, but aggressive interest rate hikes by the Federal Reserve are prompting widespread recession fears. In fact, some financial experts insist that the U.S. could be headed for a prolonged period of economic unrest. And that's the sort of news that could drive investors to sell off stocks, thereby leading to lower prices.

What to do with your portfolio right now

Clearly, the stock market is not in a very stable place these days. But it's important to act rationally as an investor in light of that.

If you're seeing losses in your brokerage account, don't panic. You're far from alone in that regard, and if you leave your portfolio alone, in time, it might easily recover all of the value it's lost. But if you go out and start selling off stocks because you're worried about further losses, you're apt to make things worse.

At the same time, now's a good time to look at your portfolio and make sure it's nice and diverse. You don't want to be overly loaded on stocks from a single market segment, because if that sector takes a hit, your balance might decline more than it needs to.

If you are invested too heavily in a single segment of the market, you might consider making some trades. While dumping some stocks from that segment could mean locking in losses, on the flipside, you might manage to replace those stocks with discounted shares from another segment.

When will things get better?

It's really hard to answer this question. If inflation starts to cool and recession fears wane, the stock market could, in turn, start to settle down. But we don't know when that will happen. And unfortunately, we might first have to endure an actual recession before this wave of stock market turbulence comes to an end.

That can be a tough pill to swallow as an investor. But it's important to be realistic about the situation. Like Orman says, it could be quite some time until the stock market recovers, so in addition to making sure you have a diverse portfolio, make sure your emergency fund is in great shape. The last thing you'd want to do is tap your portfolio when stocks are down because a need for money arises and your savings account has fallen short.