What Will the Recovery Be Like?

What Will the Recovery Be
Like?
By
www.ProfitableInvestingTips.com

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investing-tips/what-will-the-recovery-be-like
And How Should You Invest?

As the coronavirus pandemic seems to
be leveling off there are hopes for
better times ahead. What will the
recovery be like and how should you
invest? We have written about how
to approach investing at this time of
crisis starting with our wondering
how far stocks will fall.

Will there be a stock market rally and,
if so, how soon will it happen and
how strong will it be? The answers to
these sorts of questions hinge on
just what society and the economy
will look like in the weeks, months,
and years to come.

What Will the Recovery Look Like?

J.P. Morgan writes about recovery
from the covid-19 recession.

The global recession induced by
COVID-19 might only be a couple of
months old, but direct central bank
intervention and some encouraging
signs of recovery from China have
sparked the debate of a “V-shaped”
versus a “U-shaped” recovery in
economies and markets.

The “best case scenario” will be a “V-
shaped” rapid recovery, which has been
the most common case over the last half
century. The Financial Crisis and Great
Depression are the prime examples of
prolonged, “U-shaped” recoveries. The
economic conditions that end up with a
quick recovery are those in which there
are sufficient cash and credit available to
ramp up production, put businesses back
in operation and get consumers to start
spending again.

The case for a fast recovery is that central
banks and governments have been quick
to helicopter in money directly to whole
societies. The case against a quick
recovery is that just how soon the virus
will allow the economy to ramp up again is
not clear. When the initial stimulus checks
run out, will there be more? How
successful will attempts to reopen
businesses in the face of a potential
second or third wave of covid-19
infection?

To the extent that states and the
Federal government are willing to
issue debt in order to do things like
rebuild American infrastructure, such
attempts to mobilize the economy
like in WWII could have long term
benefits as well as bring the country
out of a year or two-year long
recession instead of letting it sink
into a decade-long depression!

The bottom line from J.P. Morgan is that
long-term damage is likely from this crisis
and that investors should consider this
when choosing investments.
We routinely look at what Warren Buffett
and Berkshire Hathaway are doing as a
guide for long term investing. It is of note
that Buffett is yet to make any large
purchases and is still stockpiling cash!

Investments for a Slow Recovery

Consumer goods are still necessary
during a recession. Thus Walmart is
doing well as Dollar General and
Amazon.com. Kiplinger lists twenty
stocks for a recession and the list is
heavily tilted towards companies that
provide the necessities of life and not
the luxuries.

We wrote years ago about investing in
beer as example of things that
people will buy during both good
times and bad! Mexico may have to
do without Corona beer for Cinco de
Mayo due to brewery shutdowns, but
over the longer term, production will
ramp up again and this sort of
product will continue to make money
for investors.

For more insights and useful
information about investments and
investing, visit
www.ProfitableInvestingTips.com.

What Will the Recovery Be Like?

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