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Blog #4
WHO'S AFRAID OF RECESSION?
STAGFLATION COULD BE THE WORRY NOW!
By Tom McAllister, CFP™
August is anniversary month for me. August 1, 1962 I started in the investment business. My own firm, McAllister Financial, was launched August 1, 1975. My career has been fascinating, stimulating, remunerative, satisfying. My weekly blog is one more way for me to share all I've learned….
News about the economy has been gloomy for weeks. Turns out, though, we are not in a recession after all (despite all the "bleating" by media and politicians). Instead, the economy is growing, albeit slowly. Any growth is remarkable, in my opinion, given the huge energy price increases and the near collapse of the housing market. I believe the worst is over in for both energy and housing, although the latter may take a year or two to fully regain its health.
If I have concern, it's not about recession, but about stagflation. I can remember the situation back in 1981 and 1982, when a stagnant economy was combined with double-digit inflation. I hope I'm wrong about the signs we're headed in that direction now. I don't anticipate double digit inflation, but expect living costs to increase by five to seven percent.
Even if stagflation should lie ahead, the first rule to keep in mind is, Don't Panic! Remember, even courageous investors who put money into stocks in the height of that 80's stagflation were rewarded over the next twenty years with a 1000% increase in stock values!
This blog's message: Invest wisely in good stocks for the long term. Re-examine the outlook annually, making appropriate corrections. Stay the course. Let neither recession nor stagflation sway you from your long term investment mission. (And that, friends, is forty-six years of experience talking!).
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