Stewart Financial Pro

I followed my coworker a few days ago to a seminar hosted by his financial adviser about the economy and the stock market. Apart from the expected pitch about why their firm is solid and solvent, there were quite a few insightful and interesting comments about investing and what’s going on so I want to share these with you.
This is in no way everything we need to know but I found it pretty informative and hope that you do too.
Expect a Prolonged Period of Slow Economy
Stop hoping that the economy will recover tomorrow because we are just starting to see the slowdown. Technically, the US is not even in a recession yet. They are predicting that the US will enter the recession in the 2nd quarter of 2009.
Bad Economy Does Not Always Equal to Bad Stock Market
One of the speakers came up and gave some very interesting stats.

The shortest recession was 9 months and the S&P dropped 46% in that time period
The longest recession was 32 months where the S&P happened to also drop 46%

The longest recession was really a depression but the stock market wasn’t any worst off than the shortest recession.  He also went on to say that statistically, the best time to invest in the stock market is 4 months before we get out of a recession.  Obviously, the million dollar question is when we will get out of the recession but this is really anyone’s guess at this point.
Internally, they are predicting the DOW to go to 7,500
I thought falling from 14,000 down to 9,000 was pretty bad, but they believe that the DOW is in for another 1,500 point drop. When we asked why we shouldn’t just sell everything and wait till it drops down to that level and then buy, their response was thought provoking.
If you are really disciplined, then you can try it but it’s not like the 7,500 is a guarantee. We could be 8,500 or even 6,500 and the majority of the people who sell everything are always going to wait too long to get back in. They will keep telling themselves that it’s still too early to get in and miss the huge jump at the beginning that sparks the recovery.
Unless You Have a Crystal Ball, Regular and Consistent Investing is the Only Way to Invest in the Market
So much of the short term movement is going to depend on what the government does so there is really no way of knowing how the stock market will react in the short term. The only way to invest is to put money into the stock market and rely on the American economy to right itself and prosper in the long run (which historically it has done quite well).

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