Personal Finance

Suze Orman says people are out of their minds for pulling money out and hoarding cash because they think a recession is coming

Joey Frenette

Published: January 10, 2025 9:07 am

Suze Orman isn’t just a great resource for people looking to learn a bit more about how to be better with money, but she’s also immensely entertaining, even funny to tune into. Though I do think she tends to be overly cautious regarding financial milestones and capital allocation strategies, I’m certainly not completely against the advice she may give to a caller.

At the end of the day, nobody is going to get the answer absolutely right in all cases, especially when put on the spot! In any case, Suze Orman is a respected name in the personal finance scene, and she has a lot of value to share with her listeners. Despite this, it’s all right to disagree with certain viewpoints she may have.

After all, it’s more about starting that initial conversation and meeting up with a financial pro (a certified advisor or a wealth planner) to keep things moving along smoothly. After all, conversations about money are among the hardest to have. To some, it’s a taboo topic to bring up at the dinner table. But it really shouldn’t be. How else can you take steps to improve yourself financially if you don’t discuss the matter and ponder things carefully?

Orman is no fan of timing markets.

One piece of advice that I believe Orman is spot-on with is when she says that pulling cash out of the stock market over some hunch that a financial meltdown, correction, or plunge is around the corner. It doesn’t matter if you’re the best investor on Earth; you will not be able to tell where stocks are heading next month, next quarter, next year, or even the next five years.

That’s why timing your exit from stocks at what you believe (and hope) will be the top is such a potentially costly move that could cause you to miss out on appreciation while feeling the full bite of inflation on your precious purchasing power!

Smart investors may sell stocks at times of perceived overvaluation and excess optimism on the part of investors, but they seldom throw in the towel on the asset class! There’s a difference between trimming your exposure to stocks to have more cash on hand to buy the dips that may come and hoarding cash with the expectation a recession (and market plunge) is coming.

Selling out of stocks based on fear can set you back big time.

These past two years have been profoundly rewarding for investors of all sorts. In these past two years, it didn’t really matter if you were a stock picker, a big money manager, or a passive investor in a vanilla index fund; odds are that you had a good year. The S&P 500 climbed just north of 50% in two years. And if you may remember, we had no shortage of recession fears in the years leading up to that remarkable two-year win streak for markets!

It seems like such a long time ago, but just over two and a half years prior, investors weren’t feeling all so great as the S&P 500 plunged rather viciously in the first half of 2022. Indeed, tech stocks took to the amplified hit as stocks soured through most of 2022. As you’d imagine, a recession was on the radar of many, as the Federal Reserve hiked rates and the yield curve inverted in the summer of 2022, an ominous indicator that typically points to a recession.

More than two years later and no recession has struck—and we’re still waiting! In fact, if you sold the moment the yield curve inverted, you missed out on what was a pretty good entry point ahead of an explosive two-year rally in stocks.

Those who sold would have had to buy back at higher prices or miss out entirely on what was one of the best opportunities to get into stocks since the COVID-19 crash of 2020. This goes to show that there’s no magic signal (that includes the inverted yield curve) that can predict with certainty that a crash and recession will arrive shortly after.

The bottom line

If you’re looking to time the markets, you’re risking a lot more than you think. Instead, stick with Orman, who urges investors not to make moves based on their emotions (in the case of selling out of stocks, it’s fear). For those who are overweight stocks, though, a bit of trimming here and there won’t hurt. In any case, investing is all about the long-term game and preparing to ride out the bumpy roads as they come rather than looking to avoid them.