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Commentary

Recession Ahead = Time to Sell? No Way!

With the recent jobs report, it is clear that a recession is either extremely likely at some point in 2008 or it is already here.  There’s no more denying it – only dealing with it.  And most people out there today are telling you to exit the stock market before you lose and put your money into bonds or commodities.

It is my view that long-term investors should be seeing this as an excellent time to start buying stocks and begin exiting the bonds and commodities markets.  The Dow is now below 12,000 and at a level that hasn’t been seen since October 2006.  That means prices on average are lower than they were throughout all of 2007.  Granted, they may still go down further, but that is just even more of an incentive to start buying and continue buying as the prices continue to drop.  Just make sure you do your research and find good companies at these good prices.  It’s no good to buy a bad company even at a great price.

At the same time, bond prices will be rising as the majority of speculators and short-term buyers exit stocks to find something more stable.  As a result, that makes it a good time to start selling bonds to get maximum value out of the investment. 

Although it is a very uncertain economic time for everyone and recessions often lead to worry and many problems for countless individuals, it is an exciting time to be a value investor and a follower of Benjamin Graham. 

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