Is there a second recession coming? This is a question economist, fund managers, politicians debate vigorously. Many opposing opinions were given by many experts. Jim Rogers, Anthony Robbins and Roubini claimed that things are going to get much worse. Warren Buffet and Bill Gates countered that better days are ahead for America. I wondered who is right as they are all experts in their fields. I probed deeper to uncover the answer.
My research in the latest financial reports of listed companies showed that most companies in Singapore are cautious about the outlook in the short term. Most used a standard reply similar to Hoe Leong's half year results for the outlook “As the global economy progressively recovers, the Group is encouraged by signs of improving demand in our heavy equipment parts business. However, as the operating environment continues to be challenging, the Group will continue to be cautious and prudently review our business operations and performance, while questions of whether the current recovery is sustainable remain.” I also looked into the latest financial report of US banks like Citicorp and Fifth Third Bank. Citicorp has a few insiders selling shares which showed that probably they feel the stock is overpriced. The next 2 years may be rocky to many others.
Regardless which expert is right, I applied Peter Lynch’s Strategy. That is to ignore the noise in the media and experts opinion and to stay invested in stocks that offer value. Well-managed companies and stocks offered a better return than savings account in the long term. From Rich Dad Prophecy “ if you have a strong financial education, you are not worried about market going up or down. You are just happy that they are going up and down.” As such, I remained invested in my stocks and remained optimistic about the bigger picture that tomorrow will be a better day.
