Growth Slowdown but not Recession
I put a fair bit of stock in what the Lakshman Achuthan and the ECRI says. I have done well in following their forecasts. They are not always right, but they are right more than most. I try to put their calls in the context of what makes sense to me and what the market seems to be saying.
Lately Achuthan has been talking slowdown. But not recession.
This is the sort of environment that should be good for the sort of stock that I invest in. I like to invest in commodity stocks and in special situation stocks that are undervalued. Stockpicking within both of these stock groups can be successful in a low growth environment. I will point to the second half of 2007 and the first half of 2008 as an example. The market went sideways to downwards during that time but there was enough interest in the market, and enough liquidity, to let a stockpicker find stocks that still did well.
What I need to watch closely is whether Achuthan begins to get even more negative, and signs that a recession become more clear. Because that’s an environment that no one with longs does well in.