A typical recession lasts anything between 18-24 months. With news finally out that the US economy was in recession since Dec 2007, the dejavu experience is like one who is sentenced to a couple of years in prison but with the sentence being back-dated to a year ago. So we have about 6 months to a year to go before we see the end of all these. Really?
If you observe historical recessionary cycles, there are a few trends you can pick out:
1 Each subsequent recession went deeper and further into the doldrums
2 Each recovery picked up at a faster rate and went beyond previous high
Notice that we've plunged below the benchmark 1932 Great Depression. A few weeks ago, I posted that Dow was at the basement when it dipped below 8,000 points albeit momentarily. All the stars seem aligned.
Newspaper reports have changed their tack quite a bit. They used to be harbinger of bad news, and only bad news - because that can be sensationalised. Nobody reports about a plane landing safely at the airport and skills of the pilot and crew should be applauded. Should one crash, it will be all over the front pages. Similarly, peaceful demonstration in Singapore is not so "newsy" compared to a few deaths at Bangkok sit-ins. Now we only read optimistic reports; few are inclined to batter the battered economy.
Last night, the Dow was waltzing close to the 8,000 mark again. It's time to take a good look at some undervalued stocks. Oh there are so many of those! I'd like to start exploring myself. Getting closer to home, the SGX hasn't been very much wayward from the Dow in typical Singapore fashion - we follow. We don't blaze a trail ourselves and be the maverick we can be.
Regardless of your opinion or mine, recession is definitely here. How the stock indices behave will just promote the perception or real condition. Recession is not near and is not mere fear. Be brave. Be very brave....
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