I subscribe to The Economist magazine and in this week's issue the cover story echos my sentiments and caution about the economy and the advice I give my clients when they ask me about my thoughts on the housing market.
The gist of the article is this... in the past few weeks the markets and media have been cautiously signaling that the worst is over and we are coming out the recession. Over the last 6 weeks the majority of the world's largest stock markets have risen by 20% and economic indicators from different parts of the world are brighter.
The Author warns that these faint glimmers of hope shouldn't be misinterpreted as the beginnings of a strong recovery when all they really show is that the rate of decline is slowing. An interesting fact that the author brings to light is that between 1929 and 1932, the Dow Jones Industrial Average soared by more
than 20% four times, only to fall back below its previous lows. Today’s
crisis has seen five separate rallies in which share prices rose more
than 10% only to subside again.
At the end of the article the author predicts that we shouldn't think in terms of "Next year when the economy gets better..." but rather "Next decade when the economy gets better..." Folks we are in this for the long haul if my experiences in 1989 are anything to go by I think the worst is yet to come for us.
Be sure to read the full Economist Article here.
Recent Comments