Average Americans Should Sell Non-Retirement Stocks Before It’s Too Late
Never has the U.S. economy faced more uncertainty than it does now – from inflationary pressure from the war in the Middle East to artificial intelligence.
Regardless, if you find yourself as a normal full-time everyday worker – it might be time to start taking financial precautions in anticipation of a potential economic downturn. This includes shoring up as much accessible cash as possible and selling off your non-retirement stock portfolio. Let me explain why.
The War Alone is Enough to Cause Pain
Already, Americans are feeling the pain at the pump and likely in household energy costs as the summer heat intensifies. I take no pleasure in saying this – but it’s likely only going to get much worse.
Sure, oil prices have gone down over optimism on the U.S./Iran memorandum of understanding deal and the rebound in traffic through the Straight of Hormuz, with CNBC reporting that transits hit their highest weekly total from June 15-21 since the war began at the end of February.
That said, June 24, which was the Straight’s highest vessel crossing day since before the war began, was only 53 percent of the traffic posted on the same day last year. Keep in mind that roughly a third of the global fertilizer (which impacts food prices) and up to 25 percent of the oil supply is handled through the Straight of Hormuz.
You may have noticed higher grocery prices and, of course, elevated gas prices – but that’s nothing compared to what can come as a result of a supply chain crisis.
Recently, ExxonMobil Senior Vice President Neil Chapman delivered a dire warning at the Bernstein 42nd Annual Strategic Decisions Conference in New York, noting that Brent oil prices could reach as high as $160 a barrel.
To put that into context, those levels could trigger a crisis the global economy has never seen. Pre-war, Brent prices ranged from $71 to $73 a barrel, so we are talking about a $100 an almost per barrel shock if the U.S.’s largest oil and gas company’s fear becomes reality.
“We’re approaching unheard of inventory levels. I mean, really, really low levels,” Chapman warned, according to the New York Post.
Add that to the fact that strikes in the Middle East between the U.S. and Iran resumed over the weekend. There seems to be no permanent end in sight to the war.
Two-Fold Impact on AI
But tensions in the Middle East are just one concern. Artificial intelligence raises two more alone.
One, we might be in a big bubble, with Julien Garran, a researcher and partner at UK-based MacroStrategy Partnership, estimating in October 2025 that it was already 17 times the size of the dot-com bubble, which caused a short-term recession in 2000, according to a report cited by CNN.
Are we in a massive AI bubble that’s close to bursting? There’s certainly some concern on Wall Street, with the Nasdaq Composite (an index that tracks some of the largest publicly traded tech stocks) down six percent over the past month before the start of this week. This trend is definitely something to watch over the coming weeks.
The second concern about AI is its impact on replacing human workers. We’ve seen recent major tech layoff announcements from Meta and Amazon. It’s unclear how much of an effect AI has had on the labor market currently, with unemployment holding steady at 4.3 percent – while hiring remains weak.
Still, we can’t ignore all the investment that’s going into AI, with big tech companies expected to pour $650 billion into the technology in 2026 alone, a Reuters report citing Bridgewater Associates finds.
Verizon CEO Dan Schulman predicted to The Wall Street Journal that AI could cause unemployment to rise between 20 and 30 percent over the next two to five years. Anthropic’s CEO Dario Amodei has forecasted unemployment up to 20 percent due to AI, with the elimination of half of entry-level white-collar jobs, according to Axios.
To put those numbers in perspective – that would be Great Depression levels of unemployment.
Debt and Bond Market Concerns
Debt across the board is also becoming a growing concern. One, you have consumer debt, which hit a record high of $18.8 trillion in the first quarter, a recent report from the Federal Reserve Bank of New York showed. This is a sign in a K-Shaped economy, which benefits the ultra wealthy, that the average consumer is borrowing more money than they can pay back.
Add that to the fact that the national debt continues to grow. Now, this is outpacing the GDP of the country, according to the Bureau of Economic Analysis.
The growing concerns over the national debt, the war in the Middle East and inflationary pressures have driven up government bonds, which could force the Federal Reserve to hike interest rates. This would likely result in higher mortgage rates and make homebuying even more challenging than it already is today.
A good benchmark to watch is the 10-year Treasury yield. It looked like we were potentially heading toward a bond crisis when yields spiked above 4.6 percent last month. While it has eased below 4.5 percent, the 10-year could go back up again soon if oil prices surge as a result of depleted reserves or rising tensions in the Middle East.
What you Should Do
The economy doesn’t just have one headwind – but multiple – with the most immediate threat being oil prices. For all the reasons above, I believe it’s not a matter of if, but when the stock market crashes and the economy enters a recession, which will lead to mass job loss.
I share a similar view as financial journalist Andrew Sorkin, who recently said on 60 Minutes that “we will have a crash,” but ” I just can’t tell you when” and how deep it will wind up.
Regardless, it’s important to be prepared and have a plan. Now is the time to shore up as much cash as you can and cut back on expenses such as dining and other pricey goods.
The safe bet is to trim your stock portfolio and stash that money in a high-yield savings account. Interest rates aren’t going down any time soon – so this is a safe haven. This will guarantee the appreciation of your balances.
However, this may not make sense if you have to pay a capital gains tax, which applies to single filers making more than $49,450 or $98,900 for married couples. The average salary in the U.S. is is $63,795, according to SoFi. But deductions may exempt you from capital gains, as they did for me last year. So it’s worth consulting a tax expert about it.
Also, keep in mind that some states and cities may treat capital gains as income before you clean up your stock portfolio.
However, I would never recommend selling retirement funds. Even during the worst financial crises, the stock market eventually always recovers. It’s time to prepare for short-term volatility because the economy feels like a ticking time bomb.