Are we out of a recession yet?

The following are not recommendations but my own personal opinions.

The second half of 2008 was brutal, stock market, economy and jobs took a massive pounding. As we go into 2009, we are not out of the woods yet. We are in for more volatility and uncertainty. What do we do now?

First do a self-assessment of your risk tolerance level - current income, family situation, debt levels, cash flow, job stability, age etc. If your risk tolerance is low, i.e. you cannot afford to lose money or you cannot sleep at night due to stress, then ignore the rest of this article. If your risk tolerance is relatively high, I would say that this could be the time to start investing in stocks, mutual funds and commodities.

Why invest now?
1. markets recover 6 months before the economy starts to recover
2. hundreds of billions of dollars pulled out from hedge and mutual funds and trillions pulled from the stock market into the safety of cash and treasury bills - waiting for the "recovery"
3. stock market dropped close to 50% - corporate earnings have dropped in the single digits
4. biggest problem that caused the collapse of corporations recently is lack of liquidity and credit - there is money out there but everyone is to scared to lend.... this too will change in time.
5. 2 large emerging economies in India and China will help lead the world out of this recession.
6. people never learn - we got ourselves in this mess by over-extending ourselves; we will do it again.

On the downside - credit could be frozen for another year, extending the recession by another year. Massive collapse of more financial institutions, GM, Chrysler etc. could occur. War could erupt in the middle east..... and the sky could fall down etc.

Yes, there is significant risk in any stock investment, but the question to ask is when is the best time to buy stocks? History tells us that the best time to invest is when the market sentiment is at it's most negative - during a recession, after 9/11 etc. Funny thing about most folks is, people buy when everyone else is buying like the high tech boom-bust in 1999-2001 or in the recent commodity boom-bust in 2006-2008. No one was screaming buy buy buy when oil was $11 in 1999.