correction in a long-term bull market, as many fi nancial nation to slip into a recession. Even with that some-
professionals suggest, or has the subprime mortgage fi - what liberal defi nition, recessions have become more
asco positioned us for an investor meltdown, as predicted short-lived and much less severe than in the past. Many
by some forecasters? economists attribute this to the strength and fl exibility
No one knows for sure, of course. Still, there’s no of the modern U.S. economy.
shortage of economic prognosticators willing to predict According to studies by Ned Davis Research, the aver-
one or the other of the extremes. On the plus side, most age expansion in our economy since World War II has
experts predict the long-term future most likely will mir- lasted 57 months, while the average recession has lasted
ror the long-term past — a steady pattern of economic 10 months, and in the past 20 years the U.S. hasn’t had a
growth with periods of expansion, recessions, and down- recession lasting longer than eight months.
turns in the market. All of this suggests the rules of profi table investing
Economic recessions are relatively common and are remain pretty much the same. In recent months, inves-
considered a normal part of a free economy. A reces- tor concerns have focused on the effects of the subprime
sion is a decline in GDP for at least two consecutive mortgage crisis on the housing market, the price of oil,
quarters. That defi nition makes it rather easy for the the threat of a recession, and even “stagfl ation.” While
ILLUSTRATION: DOUG STERN AUGUST 2008 MILITARY OFFICER 67
AAug_Investing.indd 67ug_Investing.indd 67 77/7/08 9:12:18 PM/7/08 9:12:18 PM
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84