While there is no doubt that patience is a virtue for investors, exercising prudence is equally important. In our prior article ‘Limiting Losses’, we examined how taking prudent measures, at certain times, can enhance your ability to create wealth over the long-term for your clients. Despite basic math and historical evidence proving its usefulness, investors typically ignore prudence, especially when it is required most. The siren’s song of a rallying market inevitably proves too compelling for many investors.
On the heels of the first quarter’s GDP release we share our concern that the probability of a recession continues rising while stock prices remain at historically high valuations. Now may be a good time to heed history’s warnings. The focus of this article rests on one simple fact- recessions are not good for stock prices.
This post was published at Zero Hedge on 05/04/2016.