RECESSION & YOU

It seems obvious. The economy is slowing down. There are more challenging times in front of us. Probably it will get worse before it gets better. No, it's not all DOOM AND GLOOM but to keep imagining a goldilocks economy is also naïve.

Things were good, maybe too good for a while. There were some excesses. Some of us lived beyond our means and now we are shifting back to normal. Normalcy may take some time because of the housing inventory, stricter credit availability and some erosion in economic stability.

Is the writing on the wall that there will be some pain in the future? Consider the following

"Oil Jumps Back Above $100 on a Texas Refinery Outage and Possible OPEC Production Cut"

"At the pump, gas prices rose further above $3 a gallon."


"The market was also concerned that rising inflation might make the Federal Reserve reconsider its bias toward lowering interest rates to help the economy."

"Global banks have written down more than $150 billion from bad bets on mortgage-backed securities -- and more losses are expected to the first quarter."


"Credit-card delinquencies are rising across the nation, a sign that some Americans are at the end of their rope financially."


"The price of steel is set to rise after Asian and European producers agreed to pay up to 71 per cent more for iron ore in term-contract rates beginning on April 1, the second-largest annual increase ever recorded."


Bottomline – the speculation about recession is a moot technical debate. We are entering a period of economic slow down and the question is how severe is the slow down and how long will it last? Conclusive answers to these questions are again an exercise in idle speculation about future world events – they can be amusing but hardly productive.


Common sense financial discipline that one needs to keep in mind includes

· Conserve your money: Reduce discretionary spending and extra expenditure. Trim, reduce, defer and tighten your spending habits.

· Stick with your LONG TERM INVESTING PLAN : Don't panic and run for the door or try to time the market or ignore your investing plan. Tweak as needed but stick with your plan.

· Keep your eyes and ears open: Assess your industry, market and company health. Keep your resume current and your network humming. Readiness is the key when the job market starts to weaken!

· This too will pass: Bull, bear, bull … the tide will eventually turn. Keep your head about water, pick up some bargains and enjoy the ride.