Major World-Wide Sell-Off
Stock markets around the globe sold off today and the current futures for the United States markets are pointing to a replay here tomorrow. Perception has become reality for the world markets. Investors can expect tremendous volatility over the next several months. If your portfolio is positioned in quality value dividend paying securities weathering this current storm will not be a problem and could turn in to an enormous opportunity. If your investments have a short term time frame, being 18 months or less we strongly suggest being in cash. (That should always be the case irregardless of market conditions.) An interesting fact is that once the “recession” is finally declared markets should start recouping losses.
From the Washington Post…
Conventional wisdom is that stock prices drop as well. Stocks usually drop before a recession, something that may be happening now. However, the market tends to look ahead and starts to respond favorably to the expected end of a recession long before it occurs. Influential economist Donald Luskin of Trend Macrolytics recently ran the numbers and found that stocks have produced an average return of 12.1 percent in post-World War II recessions. This is only slightly below the average return outside recessions.
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