To all stock investors-are we going into a recession?

Question

I have investments in mid-cap stocks and am really confused with current market. Should I switch to CD's at 5.30%

Answer 1

As someone else here said, if you mean you're in a mid-cap stock fund, maybe you should just consider riding it out one way or the other.

If you're in individual stocks I would say go over your portfolio now and consider the effects of an economic downturn on each of the companies whose stock you're holding. The risk of a full-blown recession is still rather remote at the moment, but there have been troubling signs for the markets recently. There is a very real chance of of the markets heading lower over the next several quarters. But no one knows for sure.

Set reasonable stops on all of your positions and if they get hit, just put the cash into CDs for a while. The positions which last, let them run. You could look for some shorts, too. That way if the market does turn sour, your shorts will likely show you a profit.

Answer 2

Switching to cash would be the safe way to o about it. However, I think Spetember 18th will bring a cut - especially after the job market data came out. Bernanke, after 120,000(+) est with -4,000 drop, has no choice. It is my assumption - and it is pure specualtion - that the economy will go into deep recession if he does not cut - with 2008 being an election year, nobody wants a recession because the focus would be taken away from what needs to be addressed.

I am playing the market for a cut - buying good companies hurt in the sell off and some smaller more spec stocks that will get a nice bump with the news.

I will say, my good pal is Bond Broker and he told me I shold be 90% cash right now until the smokes clears and everything is known. I just do not share his thoughts. I am 50% cash 50 stock.

I am bullish right now and will remain this way for the next week.

Answer 3

Jim Cramer says a real recession isn't in motion until:

1) It's on the front page of the New York Times or detailed in the "Money" section of the USA Today. Cramer swears by this indicator.
2) the Investor's Intelligence Survey says that most investors consider themselves "bullish." Jim Cramer thinks that means the market is as bloated as it can be and can only turn sour soon.
3) Mutual funds start withdrawing. An organization called AMG monitors the sell-offs of mutual funds as a whole.

Of course, Jim Cramer is infallible, so now you can easily know exactly when we are going to fall into a recession.

Answer 4

No and no.

You can be slightly more conservative by buying highly rated mutual funds. Many have 5 star ratings and outperformed the market in both up and down swings.

Look for MAJOR demographic or economic trends. As the WW II baby boomers age, they will need medical care and pharmaceuticals. What's more, they have the $$ to prolong their lives.

Jim Kramer has a feature on his radio show called "are you diversified"? Essentially, he is coaching his audience to do what mutual fund managers do -- outperform the market but spread the risk over multiple sectors.

That's one style. Longer term, Warren Buffet's idea of buying companies which have a "franchise" -- like Coca Cola or Walmart -- is the best plan.

Answer 5

The market always cycles . . .
Sometime bull , sometimes bear (recession )
Are you in a mid-cap fund ? ( I avoid funds )
Or actual individual mid-cap equities ?

I prefer to go with individual equities because it is easier to follow a company than a whole cluster .

As far as CDs , your short term funds should be part high yield savings ( like ING or Citi eSavings) and part CDs .
Equities are for long term holds unless you are shorting a stock .

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Answer 6

Never try to time the market. If you';re a longterm investor it doesnt matter whats going to happen tomorrow or three months from now. You should be thinking about ten years from now, in which case the market is most likely going to be higher than it is now.

Answer 7

I don't think a recession is coming, although the economy is definitely slowing. After a 10% correction, stocks are relatively cheap. There's a lot of upside potential.

Answer 8

maybe.. just pray that it does not happen...
you can swich to 5.30% CDs.