Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Jacob Snyder who wrote (11717)	12/9/2001 10:36:11 AM
From: Sam Sara	Read Replies (1) of 74559

>When? Not now. Not yet. My best guess (which isn't saying much) is that the recession ends sometime next year, and unemployment peaks late next year, and the Fed is forced to start raising interest rates by end-2002 or early 2003. At that point, the economic recovery will still be very fragile, no robust recovery. And the Fed will be caught between a rock (second leg down of a W-shaped recession) and a hard place (inflation). And that's when stocks bottom, and gold (or TIPS) are the best assets to hold. Sometime in 2003. I can see why gold and TIPS would be good at that point. Stocks, though, will then be facing an environment where the fed is at the beginning of a tightening cycle. Stocks may bottom at that point, but their upside should be limited, with a (relatively) narrow trading range.

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