Since Rarebird has me on ignore, I'm theoretically not posting to him directly, but rather in general to his comments about recession.
A Recession will force people to increase their savings and decrease their debt, and take money out of equities.
There is ALREADY a significant amount of money sitting in money market accounts. Folks put money into retirement funds each and every month and that money must be invested somewhere. If not in equities, then in bonds. If not in either of the former, it will likely end up in money market accounts drawing 6-7%, which strengthens the dollar from what we can observe as a result of the Nasdaq correction in April. The Nasdaq declined, while the dollar soared.
As for being recession proof, we certainly are not. However, with US growth having been so high over the past several years, one would think it would take more tightening that what we have seen thus far, to push the US economy over the brink into negative growth.
In sum.. take the money out of equities and it will find itself put into the money market funds or bonds. There is a strong difference between money that people put into pension plans on a regular basis, and money that is just derived from discretionary spending sources. |
