The news has been almost all negative lately, continuing to pressure markets toward Bear territory. It looks as if both consumers and investors are afraid… fear of potential recession, fear of credit market woes, fear of housing and mortgage problems, fear of… goodness you name it. But a lot of investment professionals are neutral either way. Where there is fear, there is money to be made- not only to the downside, but also with companies that are attractively priced for long term appreciation. Yet the markets head lower because investors aren’t buying, and in fact keep selling. More supply, less demand. And a lot of folks are concerned that things will get a lot worse before they get better, with some even concerned about global recession possibilities.
But there’s still a debate whether the market is consolidating or about to get worse. I’m in the consolidation camp… I think so much of the negative news is already out and that the markets will turn around sooner than later. And can we start looking at what’s right with the economy instead of how bad everything is? I’m up to my ears with the negative stuff. My opinion means little except to my personal approach to investing, and peace of mind. Markets go up, markets go down. It’s not fun, but most have us have little choice but to ride it out as we’ve done in the past. I think I’m more concerned about consumer perception and how that affects confidence, spending and ultimately the economy as a whole. The economy is still growing, albeit “at a slower pace” as the Fed has reported. It’s no surprise that we’ve been feeling pinched by higher prices for quite a while, and the Labor Department numbers finally show the inflation reality that energy and food prices rose in 2007 by the greatest amount since 1990. The highest gasoline and food prices in over 17 years? No kidding… Seems like I remember a recession around the 1990 timeframe too. But don’t worry- Mitt Romney is going to save the auto industry, textile industry, furniture industry and whatever other economic problems we have!
We may be in a recession, or see one soon. But somehow I think we’ll stay ahead of it nationally. Wall street is urging the Fed to take more aggressive action, and they’ll probably cut rates at the end of the month. Congress is supposedly putting together a stimulus package too, and that would boost the Fed’s efforts as well as consumer psychology. The economy may really be that bad, but combine all of that with a dynamic election year and I think the signposts to economic recovery will become a lot more clear in a few months.
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