The R Word!!! Why Believing it's Here Makes you More Likely to be a Fad Dieter!

No, I don't intend to counsel you on the merits of keeping your roots in check by having a regular recurring appointment with your hair stylist. I talking about the term being tossed around like a teenager with a roll of toilet paper late night in a neighbor's yard: "(The supposed-impending- bound to happen-already is here-will be if its not) Recession"!!!

Each day, the media coverage gets more ominous and damning. Even those who are supposedly schooled in these matters in the finance industry have been caught dangling the "R" word in public. (I think this has more to do with the fact that these types like to "call the market" and attempt to predict direction; by the way, most of them suck at it, to be so frank on this lovely Friday. And recessions are a normal part of the economic cycle, so they figure if they keep saying it, they'll at worst be "ahead of the curve".)

Some people are downright paralyzed by the school yard taunts coming from the press: "The economy!"; "Subprime crises!"; "Credit crunch!" These guys are paid to sell "news", and I'm beginning to see that their "fear" -- uh, I mean "news" is about as worthy and researched as the National Enquirer reporting that Lindsay Lohan is giving birth to a human clone of Britney Spears during Tom Cruise's next Christian Science diatribe.

The main problem is, no one ever stops to question this negative information superhighway to see if the economic fundamentals are really in peril. (Going to primary sources would be too boring and time consuming, right?) It's all about selling "news", which means selling fear. Even the good ole' USG today announced that they've bought into it --its "stimulus package" is on its way to your front door. (Gotta keep the voters happy, even if they don't speaka!)

Be honest with yourself -- if I asked you to define the R word, "recession", what would you answer? "Bad economic times?" Nope. "I can't own a home in San Francisco or New York City so times must be bad?" Please! "Markets are down?" No!!! According to Investopedia, a recession is "two consecutive quarters of negative economic growth as measured by a country's GDP".

I really doubt most HMW keep a running tab of the Bureau of Economic Analysis' quarterly GDP reports front of mind. So let's take a look at the last three years (from top of page 5 of the aforementioned link):
2005
Q1 = 3.1%
Q2 = 2.8%
Q3 = 4.5%
Q4 = 1.2%
2006
Q1 = 4.8%
Q2 = 2.4%
Q3 = 1.1%
Q4 = 2.1%
2007
Q1= 0.6%
Q2 = 3.8%
Q3 = 4.9%
Q4 = not yet posted

It doesn't take a math whiz to see that there ain't a negative number here. Hmm... maybe Investopedia didn't get the memo that the media changed the definition of a "recession" to "getting the US consumer really scared of the 'crisis' "?

I urge all HMW to ignore the hype! Keep investing, saving, and being productive!!! Enjoy yourself.

Still think we're heading towards economic disaster in the US based on the hype? I smell a fad dieter! Go eat some real food, you probably just have a headache from your "negative calorie soup", high-protein/no carb plan or "no orange stuff" diet.




If you can't get these "terrible times" out of your mind, the only cure for you is to give up TV for good music or a book, preferably the latter and Siegel's Stocks for the Long Run!