Should You Make Money Investment In A Junk Recovery Phase?
Investment | September 26, 2009 at 1:10 amNews of the fading recession might have made a few of us sigh in relief and made us hopeful of good times to come, but this has sparked off the biggest debate the present times have ever seen and that is, if the recovery is going to be a lasting one. Though the stock values seem to have shot up the previous week, market experts are quite split over their opinions on weather this development is going to stay because it depends on how fast the economy recovers. Many of the experts are doubtful of the genuineness and permanency of the recovery.
Market bulls feel that the recovery is for real. But you ask the bears and they’ll tell you that its not actually recovery in the true sense of the word, but a temporary bubble that is created by the government’s stimulation of money. According to them many investors might not be able to distinguish between the genuine and the stimulated at this point of time. So investors, beware, lest you make investments in haste now and regret later if the condition worsens again!
Ed Yardeni, lead economist, Yardeni Researcher, who was a pro-bull once upon a time, opines that the situation is somewhat in between. So, the recovery has both elements of real recovery as well as the stimulated one. Programs like the ‘Cash for Clunkers’ and the ‘$8000 tax credit for first time home buyers’ might have stimulated the economy and helped the auto and housing industry with their financial lows and has motivated the spending powers in consumers, this should be taken as a real or permanent solution to the monetary dearth the country’s been subject to since the last 
couple of years. But nevertheless this stimulation of money has initiated a GDP growth which though modest at 2 % signifies a true improvement in the economy of the country.
Whenever we talk about a recovery we are mostly concerned with its survival and how long its going to survive. But according to Yardeni, recoveries sustain on their own, and you really don’t need any deliberate stimulus programs to sustain the recovery. According to him, muddling along is a more probable thing that is going to happen to the current economy. As many of us might be predicting, Petering Out doesn’t seem to be a probable thing to happen, Mudding Along seems to be
For the last six months small investors don’t seem to have been active at all. However, the big investors 
have kept buying the rising stocks to keep themselves surviving and also to compensate for the economic losses that have been faced last year. According to Matthew Rothman, Barclay’s Quantitative planner, this recovery is a junk rally poor quality one.
According to Satya Pradhuman, Quantitative Strategist, Cirrus Research this is the best time to sell as the government’s stimulation of the economy has actually made the economy go beyond recovery. According to him the optimism built up shows a big risk of being shattered with disappointments as the recovery fails in the coming months.
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