For the end of 2007 we believe that we are on the verge of a small stock market recession. Corporate earnings have been slowing and the support we have been receiving from the global economy is also slowing. Originally we believed that we would only see a small stock market slowdown as the global economy supported us. Now that the global economy is showing signs of slowing, we run the risk of a small or even a large recession. Right now it only looks like we'll see a minor recession.
The advice we have been giving our members is to hold back on investing new money in the stock market and to trim back some current stock investments. Why risk your hard earned money with an economy that doesn’t look good? The probability of losing money in stocks is higher during a weak economy like we have right now. Once the US economy gets stronger the possibility of making money in the stock market should be much higher. Sign up for a complimentary free trial of our online investment advice service.
We recommend holding more cash then normal and taking advantage of the great rates that an online savings account offers. An online savings account doesn’t tie up your money and it also gives you a nice rate of return. See out list of great online savings accounts.
There is also the option of recession protection by using an ultra short ETF or by buying stock put options. We have not been recommending this to our members but it could be a great option if you are concerned about a larger stock market recession. Read some of our posts on portfolio protection.
Comments (2)
I don't know about this small recession. With this horrible credit and housing market I think we are in for a big one. I'm shorting the market heavily!
Posted by Anonymous | November 12, 2007 3:45 PM
We entered a recession in the summer of 2007.
That was before oil peaked at $100, and before the credit melt down. Here we are mid February 2008 and the US government can't even acknowledge the financial mess we ar in.
Rightly so, they can't because it would cause further errosion of a system so fragile it is held together with tape. Meanwhile, we are sending trillion$$ overseas with crazy war monies and third world manufacturing that is now coming back into the country to buy us out, or is it lend support, I am confused.
But I am assured that the next batch of contenders for the White House are proven succesful businessmen/woman, have great leadership abilities, are well versed in economics and are well read on the Great Depression. Or should I be realistic and say they are as apparently incompetent as the current buffoons in the White House.
This economy is going to get very ugly before it even begins to see the light of day. With no real leadeship in place now or in the foreseeable future, be it in political course and more importantly in economic direction, regretably our precarious position will continue to erode.
Posted by Tex Pitfield | February 15, 2008 1:19 AM