How Tomorrow Moves| More...
 

Recession-Proof Your Portfolio

Yahoo Finance   |  Annie Sorich   |   December 26, 2007 09:53 AM

Read More: Buy Don't Sell, Gdp, Gross Domestic Product, Liquidate Investments, Recession, Recession Fears, Shrinking Economy, Breaking Business News
stumbleupon :Recession-Proof Your Portfolio   digg: Recession-Proof Your Portfolio   reddit: Recession-Proof Your Portfolio   del.icio.us: Recession-Proof Your Portfolio

There's lots of talk of a recession these days, making many investors nervous. What exactly is a recession? The technical definition is two quarters (six months) of negative gross domestic product growth. (GDP is the total market value of the new goods and services produced during a specified time span.) More simply, a recession describes a shrinking economy rather than a growing one.

Although a downturn in market performance isn't necessarily a recession, the two can go hand in hand, as the last two recessions in 1990 and 2001 suggest. Currently there's not a consensus on whether the U.S. is in a recession, heading for a recession, or simply slowing down a bit, but it never hurts to be ready. Below are a few important steps to take when the economy turns sour.

Buy, Don't Sell

We all know the old adage "Buy low, sell high." Yet that's the opposite of what some people do when the economic climate looks gloomy. The start of a recession is not the time to liquidate your investments. Depending on your time horizon, you most likely have enough time to ride out short-term stock price drops that might happen during a recession. If you're in your 30s and saving for retirement, a few market bumps will be ironed out in the long run. Still, it's important to construct your portfolio with your time horizon and risk tolerance in mind, which can help you sleep easy if the market does start to tumble.

Comments for this post are now closed


 
Comments
5
Pending Comments
0
iPhone App Promo

Want to reply to a comment? Hint: Click "Reply" at the bottom of the comment; after being approved your comment will appear directly underneath the comment you replied to

View Comments:
- Galvestonians for Dr. Ron Paul I'm a Fan of Galvestonians for Dr. Ron Paul 26 fans permalink

Stop the recession entirely.

http://www.youtube.com/watch?v=ruSqkSAdWUw

Lets get rid of the federal reserve.
The federal reserve is no more "federal" than federal express!

    Favorite    Flag as abusive Posted 12:02 AM on 12/27/2007
- WIpatriot I'm a Fan of WIpatriot 36 fans permalink
photo

Yes, yes, everybody BUY! Borrow money if you have to, we, er, you can only be successful if you keep BUYING.

Bwhahaha.

    Favorite    Flag as abusive Posted 10:19 PM on 12/26/2007
- mrcontinental I'm a Fan of mrcontinental 56 fans permalink
photo

This is the Christmas present from Bushonomics for you in 2007: Collapsing money market & bond funds. If you have your money in so-called money market funds, you may be in danger of losing it all. Why? Because unbeknownst to most, as they say, these funds may be invested in toxic unsaleable CDO"s and SIV"s.

The public is not being told by either the Bush Regime or the so-called financial media that every week we are seeing the collapse of all of the different types of money market funds. For example, this week, we discover that Nuveen, the old-time fund manager with the well-known and well-advertised money market funds are in trouble. We also discover that Sun Trust had to come up with $1.4 billion of its own capital to shore up its money market funds.

Frankly, this is an increasing trend that we have seen since September, wherein banks and brokerage firms are having to dig into their own capital to come up with ever increasing amounts of money to shore up their money market funds.

Also, for the first time, we are now seeing banks and brokerage firms allowing their money market funds to collapse because they"ve run out of capital to continuously shore up their funds.

Money market funds are sold to the American public on the concept that their $1/share NAV (Net Asset Value) will be continuously maintained no matter what. And that, of course, is not true.

That is completely deceptive, but all banks and brokerage firms sell money market funds on that premise. The reason why the unwashed believe it is because there hasn"t been any collapses of money market funds -- until recent times.

    Favorite    Flag as abusive Posted 01:20 PM on 12/26/2007
- ibsteve2u I'm a Fan of ibsteve2u 132 fans permalink
photo

Market advice these days is not worth a lot unless it comes on the quiet from either the Wall Street or the White House division of Goldman Sachs.

    Favorite    Flag as abusive Posted 10:24 AM on 12/26/2007
Comments are closed for this entry

 You must be logged in to comment. Log in  or connect with 

Connect