Recession over?

Today the US announced that it's 3rd quarter GDP grew by 3.5 percent ending the worst recession since the great depression. Should we celebrate?

There are many naysayers who are still bearish about what is going on. Talks of the US and the global economy slipping back into negative territory are still rampant.

I beg to differ. The economy is only going to get better. Here's why...

1) Things can only get better. Simple fact. How many recessions have we had since the great depression? What some fail to remember is that we have had the same amount of recoveries. If you're going to invest, I'd say it's a good time to go in right now if you have a time horizon of 1-2 years. Things are going to get better. It's a matter of time.

2) The situation is ripe for a recovery. Interest rates are at an all time low. The governments around the world are pumping money into the economy to stimulate the economy. Those who say that the economy should function on it's own without any governmental intervention are really myopic. The government's role is to take care of the economy and facilitate the functioning of a proper market. If everything were left to the free market then who is to pay for things like street lights and defence? Thus governments are there to prop up things when they are depressed and to take away heat when markets are over heated.

3) The fact that there are so many cynics is a good reason to invest! Everyday there are people trying to talk the market down. This only serves as a reminder to the policy makers about the fragile nature of the economy. Now not only does the US have the policy makers trying to spot weak spots in the economy, the cynics also act as helpers to the policy makers with regards to any possible trouble spots! Warren Buffet once said "Be greedy when others are fearful and be fearful when others are greedy". As of today, many are fearful and surprising enough to say the least, fear is keeping this market on it's toes from falling back into recession.

I'd still keep the bubbly champane on ice till mid 2010. That's when Dow reaches pre crisis levels of 11,500 and STI above 3000.

Cheers to the recovery. (Holding up a can of beer instead)

Yours Sincerely,
Daryl