Investing experts say the downturn in the stock market shouldn’t make investors queasy. In fact, one advisor states they should continue to buy U.S. stocks even though others insist a recession is in the works.
Those like Forbes contributor Peter Anderson of Boston-based Anderson Capital Management state predictions aren’t reliable and are confusing. The best advice, he states, is to invest for the long haul and don’t be swayed into selling by a short-term correction.
Many are predicting a recession to likely happen around 2020 or 2021. The upside is most believe it will be a mild recession, at least in comparison to the huge economic spiral of 2008. Here are some of the reasons cited for a recession:
A bull economy can’t last forever and will always have a correction. Most historical graphs show a downturn after 39 months of a boom. If the current economy lasts until 2020, it will be the longest run of economic expansion in the U.S. The longest running expanded economy was 120 months. The current great economy has gone on for 109 months, according to statistics.
Current conditions are excellent. The Gross National Product (GNP) ) is at 4.1 percent, the unemployment rate is at 3.8 percent, and people are taking out more credit and spending more. Housing construction and sales have been up and properties are rising consistently in value.
Economic gurus state that, basically, the economy can’t get any better so it must get worse. It must downturn sometime and is overdue for a correction.
The Federal Reserve has raised interest rates and inflation rates are also rising. The Consumer Price Index has inflation at 2.4 percent. Rises in interest rates and inflation creep into disposable income and also makes getting a loan more difficult.
Housing sales are slowing down in major cities and many say that is another indicator of a recession in the future. Part of the slow-down reflects back to rising interest rates and inflation. However, another factor could be that homes in large metropolitan cities are simply unaffordable with median prices at $500,000 or more.
The best advice most in the financial area give to consumers is to start paying off debt, make sure you have savings and continue to invest in solid stocks. These practical measures will help you weather any financial storm.