Wednesday, September 10, 2008

Consumer confidence is very low and that is a good sign

Consumers are usually the last ones to know when a recession hits. By the time the news gets out and you see it on television, most everybody knows and that means that most of the bad news is out. It's priced into the market. That increases the chances that the majority of people are likely projecting that bad stuff will continue to happen. That in turn raises the probability of a positive surprise, especially if things don't turn out as bad as everyone expects. This is contrarian thinking at work: when everyone is depressed, and stocks are down, and bankruptcies are dominating the news, that is the time to put some money to work for you.

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