Wanting the Downturn to be Over

Like all of you, I want this downturn to end soon. Everyone who owns property or investments for retirement has seen their net worth plunge this year.

Many people are saying we are at the bottom and that now is a good time to invest again. I hope they are right, but I am not sure yet.

With the stock market down about 50% worldwide, this ought to be the bottom, compared to previous recessions. However, I wonder if we might not see a a second stage of this sell off in the next 3 - 6 months. I have no crystal ball to predict next year's headlines, but if they are as grim as what we have seen in recent months, it could mean more bad news for the markets. Furthermore, governments have reduced interest rates to virtually zero and maximized monetary and fiscal measures. If this huge amount of stimulus fails to break the downward pattern, we could be facing a long economic winter.

But even if my pessimism proves wrong about the stock markets, that would not automatically mean that that the broader economy will turn around quickly. On the contrary, I expect unemployment to rise for several years. I expect retail sales and manufacturing activity to decline for 1 - 2 years, if not more.

Obviously, I hope my gloomy assessment proves to be wrong. But many years ago I learned the error of assuming what I want to happen will be what actually occurs. My favorite sports teams and politicians win occasionally, but lose more often. I find it helpful to retain dispassionate objectivity even when I am sick and tired of watching disasters unfold.

So I am not buying into a recovery yet.