GREETINGS FROM PARIS, FRANCE!  HOW SEVERE WILL THIS RECESSION BE?

I have received a number of questions regarding the severity of the current bear market and possible recession. Everyone seems worried. With all the wild swings in the U.S. and global markets, many investors and financial planners are asking, "WHAT DO I DO  NOW?"

I should say that anyone who's asking that question IS NOT a FOXHALL CAPITAL client. As you know, on January 10th, FOXHALL announced that our proprietary indicators had triggered our FOXHALL DEFENSIVE STRATEGY, and since that date, we have been moving our client’s portfolios into very DEFENSIVE investments like bonds, foreign currencies (to make money on the falling U.S. dollar), gold, other precious metals, agricultural commodities, hard asset commodities and a few Pacific Rim and Emerging Markets broad index funds. Almost all of these investments are counter- cyclical to the U.S. stock market.

I believe that our FOXHALL DEFENSIVE INVESTMENT STRATEGIES will have a good chance to weather this bear market/recession well.

ANOTHER VIEW ON RECESSION

The economist and writer BEN STEIN wrote in a recent article:

“Unemployment always rises in recessions. The degree of the rise is usually modest, generally only about 2 percentage points, although some—like the one engineered by the Fed in the early Reagan years—have gone as high as 4 points. The average length of involuntary unemployment during recessions is about six weeks.

There is some good news in here.

Even in a recession, more than 90 percent of workers who want to work will be employed. Even in a recession, most businesses will make a profit. Even in a recession in this era, more than 10 million men and women will need cars and trucks. Many millions will need new homes. Tens of millions will need retirement-investment products and life insurance. In the United States, even in a recession, there are plenty of people with money to spend.

Those who tend to their work, who get to the office or showroom or shop early, stay late, work hard, stay on the phones dialing for deals, will make money. Those who stay sharp and make a point of befriending their clients will make money. Yes, some extra effort will be needed, but it'll pay off. There's still money to be made, even when the economy itself has slowed down.

It's the guy or gal who puts in extra effort that stays ahead and even prospers when the economy is in a slowdown. The easygoing, laid-back time-servers get tossed overboard.

There's another key truth about recessions: THEY ALWAYS END and the economy always goes on to a new plateau. It may take a while, but the stock market always moves on to a new high. 

So stay hungry. Work harder. Dig deeper. Keep investing in broad indexes.

You'll come out all right on the other side.”

AMEN BEN!  (Until next week…)

 —Paul Dietrich

dietrich@foxhallcapital.com