Friday, April 04, 2008

The Recession Boogeyman

Economist and Smartmoney contributor Donald Luskin declares we are not in a recession and have not been in one. He thinks the worst is over and gives his many reasons.

I've said all along that I don't think we are in a recession, but at the end of the day I have no idea and it doesn't matter. If you knew we were in a recession, how would you act differently? The answer is that you may sell stocks.....of course the average return of stocks during a recession is a positive 9.1% - so thats not such a good idea.

The fact of the matter is that recessions are inevitable and they come and they go and they are natural. A well diversified portfolio will get you through the good and the bad IF you stick to it. Panic and sell out and you'll join the legions of investors who earn sub-par returns in stocks.

Scott Dauenhauer, CFP, MSFP, AIF