What makes you more nervous, a recession or a booming economy? If it seems like I am insane by saying a booming economy makes me jumpier than a recession, then keep reading and see if you can join my insanity.
When you are in a booming economy and the stock markets are making new highs on a daily basis, eventually something has to give. Nothing on this planet goes up forever, Newton proved that with his apple when he “discovered” gravity. (note: many things fell to the ground before Newton, but nobody bothered to give it a name). Just like that poor fateful apple housing, stocks, oil, gold, copper, lumber and food products cannot go up in price forever without coming back to earth. When they come back to earth, we don’t call it gravity, we call it a recession.
Now stating that, unlike an apple that lands on the ground and becomes compost, the economy (stocks, bonds, and all the other things previously mentioned) don’t go down forever either. In fact, a recession, economic gravity, historically only lasts between 6 and 14 months once the proverbial towel is thrown in and the government declares the recession has begun. Typically once the recession is in full force, the Federal Reserve interest rate cuts that happened 6 months earlier begin to affect the economy. The government stimulus packages begin to trickle into economic mix and government spending on unknown and generally unneeded projects boosts employment.
All of that fantastic busy activity that hits the economy 6 to 14 months after the recession begins historically begins a new growth cycle that can last a decade or more. So while recessions are a natural part of the economy ( and arguably a good thing in the long run although painful in the short term) why do politicians, economists, and the general news media spend so much time fighting the trend? Why do they continue to attempt to fight a basic concept of physics called gravity?
Because it makes good news copy, makes great speech material, and gives economists a reason to leave the think tank and breathe unfiltered air. In the long run, if not now then someday, gravity will take hold. We will eventually go into a recession. It will last somewhere between 6 and 14 months (approximately) and we will survive and recover.
So once again, please just let the recession happen so we can start to recover and move forward. Let’s have our correction and then bring forth another decade of fantastic growth and innovation. Let’s quit fighting gravity and bounce with it. We will all be happier if the Chairman of the Federal Reserve is not a household name and the Secretary of the Treasury is an extra credit question on our children’s economics class.
________________
Mike Bosso
Financial Advisor
One Lincoln, Ste. 375
10300 SW Greenburg Rd.
Portland , OR 97223
877-421-9991—toll free office
971-212-9464---cell
[email protected]
Securities offered through Pacific West Securities, Inc., Member FINRA/SIPC
Advisory services provided through Pacific West Financial Consultants, Inc., a Registered Investment Advisor
When you are in a booming economy and the stock markets are making new highs on a daily basis, eventually something has to give. Nothing on this planet goes up forever, Newton proved that with his apple when he “discovered” gravity. (note: many things fell to the ground before Newton, but nobody bothered to give it a name). Just like that poor fateful apple housing, stocks, oil, gold, copper, lumber and food products cannot go up in price forever without coming back to earth. When they come back to earth, we don’t call it gravity, we call it a recession.
Now stating that, unlike an apple that lands on the ground and becomes compost, the economy (stocks, bonds, and all the other things previously mentioned) don’t go down forever either. In fact, a recession, economic gravity, historically only lasts between 6 and 14 months once the proverbial towel is thrown in and the government declares the recession has begun. Typically once the recession is in full force, the Federal Reserve interest rate cuts that happened 6 months earlier begin to affect the economy. The government stimulus packages begin to trickle into economic mix and government spending on unknown and generally unneeded projects boosts employment.
All of that fantastic busy activity that hits the economy 6 to 14 months after the recession begins historically begins a new growth cycle that can last a decade or more. So while recessions are a natural part of the economy ( and arguably a good thing in the long run although painful in the short term) why do politicians, economists, and the general news media spend so much time fighting the trend? Why do they continue to attempt to fight a basic concept of physics called gravity?
Because it makes good news copy, makes great speech material, and gives economists a reason to leave the think tank and breathe unfiltered air. In the long run, if not now then someday, gravity will take hold. We will eventually go into a recession. It will last somewhere between 6 and 14 months (approximately) and we will survive and recover.
So once again, please just let the recession happen so we can start to recover and move forward. Let’s have our correction and then bring forth another decade of fantastic growth and innovation. Let’s quit fighting gravity and bounce with it. We will all be happier if the Chairman of the Federal Reserve is not a household name and the Secretary of the Treasury is an extra credit question on our children’s economics class.
________________
Mike Bosso
Financial Advisor
One Lincoln, Ste. 375
10300 SW Greenburg Rd.
Portland , OR 97223
877-421-9991—toll free office
971-212-9464---cell
[email protected]
Securities offered through Pacific West Securities, Inc., Member FINRA/SIPC
Advisory services provided through Pacific West Financial Consultants, Inc., a Registered Investment Advisor
