20 October 2006

Risks of recession continuing to rise | Chicago Tribune

Risks of recession continuing to rise | Chicago Tribune: "Most major polls of economists have said the chances of a recession and its ill-begotten progeny, a bear market, are very low.

While stock market bulls may take comfort in that, they should remember this: Not one recession in the past 50 years was forecast in advance by a major poll of economic forecasters, said James Stack, a market historian and editor of InvesTech Research.

Recessions and bears can and often do arrive unexpectedly. Savvy investors simply cannot rely on assurances that the economy won't lapse into recession, generally defined as two consecutive quarters of negative economic growth.

Recent polls of economists put the odds of this at less than 25 percent.

'At this stage of an economic recovery, now going into the fifth year, it is time for investors to get more defensive and more conservative,' Stack said. 'They have to navigate their portfolio through treacherous waters for the next six to nine months.'

That's because bear markets typically presage recessions and can lop off 20 percent or more of an investor's portfolio."

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