Lakshman Achuthan, managing director of the Economic Cycle Research Institute (ECRI), predicts (via Yahoo Finance – Tech Ticker) that the US has entered a period of “more ‘boom and bust’-type cycles,” similar to what occurred in the 1970s. He therefore believes a buy-and-hold-strategy is dead.
“You don’t have to be a mad scientist,” he said; just “back off your risk in the stock market and buy bonds” if a recession appears imminent. “And if we see a recovery take more exposure and get out of bonds because the recovery is going to give you a little inflation.”
However, the trick is forecasting the start of the recessions and recoveries, a skill ECRI believes it has mastered. “I’m not suggesting we’ll get it right all the time but we’ll do a lot better than ‘buy and hold,’” Achuthan said.
Source: Yahoo Finance – Tech Ticker, March 29, 2010.
