Seeking Recession Proof Businesses
The outlook for equities is far from rosy in a post-TARP world. Historical indicators suggest that investors wanting to buy at the bottom of the market have some time to wait before yet. The game is trying to identify recession proof businesses with strong balance sheets.
Back when the Resolution Trust Corporation was established in 1989 it took more than 12 months for the stock market to bottom, and it took three years for the housing market to bottom.
The downwards spiral may just have begun, with the decline likely to be punctuated with false dawns.
Another example would be the crisis of Sweden in the 1990s where a bear market persisted for over two years, the market lost 45%, and domestic demand shrank. And consider that the Swedish example is much cited as the best-handled case.
Shadow of Economic Slump Looms
In 1997 Japan unveiled its Financial Supervisory Agency to great fanfare, but it wasn’t until 2002 that the stock market recovered, and as for the housing market it is still lower than 15 years ago in most of the country. The 100 yen stores (one dollar stores) were good examples of recession proof businesses.
The recession is just beginning, and even with the Troubled Assets Relief Program the road ahead is bleak for the next few years.
