Look at the history

Posted 4 August 2009 by Neil Moore

I know it's bad out there...

But you must remember, this recession WILL end.

Chances are excellent we're more than halfway through. You have to go back to the early 1930s (the Great Depression) to find a recession that lasted longer than 16 months.
Since this recession started in late 2007, it will undoubtedly be the longest since the Great Depression. But, I believe the recession has already hit bottom and will end before the end of this year.

Stock prices typically bottom out in the middle of recessions. This is because stock prices "look ahead." They "see" recovery before recovery actually arrives.

Consumers don't look ahead like this... They are interested in their present situation, which is not good. So while stock prices can bottom in the middle of recessions, consumer confidence typically bottoms at the end of recessions. People don't see things getting less bad... It's a "darkest-before-the-dawn" type thing.

If you look at the history of previous recessions you can see that the stock market follows consumer confidence. I only repeat what I read and there definitely seems a paten forming.

If the November stock-market bottom holds, and the record low in consumer confidence holds, we may be closer to the end of this recession than just about anyone thinks. It's too early to know for sure, but these factors suggest the recession may have bottomed, and things are already getting "less bad."

I believe and hope that's true. If I'm right, you should make a pile of money investing in both stocks and property in 2009.

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