Weekend Research II: Is It Different This Time?

Weekend Research II

As I often do over long weekends, I am using the extra time off from market action to review old articles, research items, etc. that I have accumulated.

From that work comes this: Be a cynic. Be very skeptical regarding what you hear on TV & radio, and what you read in newspapers, magazines, etc. (even those generally highly regarded).

As an example, I submit the following for your review:

• Barron's, 10/08/07, "Economic Beat" by Gene Epstein: Headline - "Why Recession Is Remote"; CurtB - National Bureau of Economic Research (N.B.E.R.) pegs recession as beginning Q4/07.
  
• Barron's, 02/04/08, "Economic Beat" by Gene Epstien: Headline - "Slowdown, Not Recession", Lead sentence - "Has a recession begun? Probably not -- and a recession probably won't strike in 2008."; CurtB - Had already been in a recession for 5 months, and it would get much worse.
  
• Barron's, 09/29/09, "Economic Beat" by Gene Epstein: Headline - "Why GDP Will Keep Growing"; CurtB - By this date we were well into one of the worst recessions in the past 60 years, GDP would not begin growing until the then current quarter, and GDP #'s would rollover AND suffer significant reductions when benchmark revisions were issued.

Barron's, 10/20/08, Cover Story by Gene Epstein: Headline - "Sorry, Chicken Little", sub-headline - "The sky over the U.S. is dark gray, but isn't falling. Why a deep recession isn't in the cards"; CurtB - OOOPS.

And not to solely pick on Mr. Epstein, there's these gems from Barron's "Big Money Poll" reported in it's April 28th, 2008 issue.

• "More than 55% of pros think stocks are undervalued . . "
  
• Asked to describe their investment outlook through Dec. 2008 - 7% were very bullish, 43% listed themselves as bullish, 38% claimed to be neutral, and only 12% held a bearish outlook for the balance of 2008.

I could go on, citing examples from other sources. And, for the record, I find much useful information and many good articles in Barron's. The point is simply to be aware that the conventional wisdom, even from sources purported to be "expert", can be dangerous to your financial health.

My present, embryonic, concern is a developing "storyline" I have heard a few times that claims that we shouldn't worry about a double dip because with housing and other portions of the economy so bad already, they can't get much worse or drop much lower, so how could we possibly get a double-dip?

We'll see. For now my overall strategy is to play for a short-term dip, a continuation of the intermediate-term rally, and then re-evaluate from that point.

And remember, like 'ole Gene from above, I could be wrong, and so we all must stress good Risk Management.