current economic crisis explained

How to Invest During Economic Downturns: Commodities Vs. Stocks

In an article published yesterday (January 23, 2008) in the Financial Times, George Soros stated that a recession in the U.S. is now more or less inevitable. He noted that China, India and some of the oil-producing countries however are in a very strong countertrend. Soros went on to explain that “the current financial crisis is less likely to cause a global recession than a radical realignment of the global economy, with a relative decline of the U.S. and the rise of China and other countries in the developing world. “

A growing number of economists, money managers and analysts have begun issuing warnings that a recession may be hard to avoid in 2008. On top of that, recent data is indicating an increase in inflation that is being fueled by higher prices for commodities such as oil, wheat and corn.

Given the growing concerns of the future of the economy, I thought it would be very helpful to provide readers with some history on how commodities and stocks have performed over various economic cycles.

Performance of Commodities vs. Stocks

To understand how commodities and stocks perform during economic downturns, let’s look at past trends.

In a revolutionary study from the Yale School of Management’s Center for International Finance entitled Facts and Fantasies About Commodity Futures, research revealed very important differences in how commodities and stocks perform over time. The research team analyzed how commodity investments performed compared to stocks and bonds over the last half century.

Below are some key highlights of the research findings over various investment horizons:

* Stocks and bonds are negatively correlated with inflation. In other words, as inflation increases, stocks and bonds tend to move in the opposite direction. Commodities futures, in contrast, are positively correlated with inflation. When inflation rises, commodity futures tend to rise as well.

* Commodity prices can rise even during economic downturns. Commodities can serve as a hedge against stock market and economic risk.

* Commodities and stocks have a negative correlation. In other words, commodities and stock perform tend to perform oppositely over time. When stocks go down, commodities, over time, tend to move up and vice versa. Thus, a portfolio invested in stocks and commodities is likely to experience less volatility than a portfolio that is comprised of only stocks.

* From 1959 to 2004, commodities futures produced comparable annual returns to stocks and greatly outperformed bonds.

* Commodities have had less risk than stocks over time. The volatility (i.e., fluctuations in portfolio returns) of the returns of commodities futures over a 43-year period was less than the volatility of the S&P 500 index over the same period.

While no one can be certain if the looming recession will be global or more or less confined to the developed world, one thing is clear: ignoring commodities in a declining stock market is irrational.

Every investor can benefit by learning how to invest beyond stocks and bonds. A properly diversified portfolio that includes commodities can enhance return and reduce risk. To learn more, visit www.powerpathtomoney.com

In a recent interview with Bloomberg (January 7, 2008), Jim Rogers, known by many as the world’s expert on commodities investing, reaffirmed his positive outlook on commodities. He stated that “All commodities are going to be in much shorter supply for another decade.” Rogers indicated that in the event of a global recession, agricultural commodities may be the best investment among commodities.

The findings of the Yale study and others have triggered huge changes in the financial industry—many which affect you. Investment companies are increasingly creating new investment vehicles to enable individual investors to participate in commodity investing. Today there are easily accessible ways for you to invest in commodities and to find which investment vehicle is right for you. Anyone can now invest in commodities in low-cost and easy ways that were not available during the last commodity bull market.

About the Author

Mary Rivas has over 16 years of experience working in the investment management industry, and is the author of Power Path To Money, which is available at www.powerpathtomoney.com. She wrote this book to teach people 1) how to easily invest in commodities using a step-by-step approach and 2) how to invest in themselves to achieve maximum success. Her book reflects her philosophy that successful investing is achieved by being knowledgeable about investment opportunities and by developing one’s inner power.

What is the Prime crisis, if what we have now is a sub-prime crisis?

We hear a lot about the current economic crisis grippling the US economy now but fast spreading all over as the sub-prime crisis. Wd someone explain why it is called so?

Sub-prime describes the state of the borrower in a home loan situation. A “sub-prime” borrower generally tends to have a higher risk of default, such as those who have a history of loan delinquency or default, those with a recorded bankruptcy, or those with limited debt experience. There is no such thing as a “prime crisis”

(1000) WHOLESALE ANTI OBAMA BUMPER STICKERS~OOPS! (c) HIGH QUALITY VINYL!

$415.80

(500) WHOLESALE ANTI OBAMA BUMPER STICKERS~REVOLT (c) LMFAO HIGH QUALITY VINYL!

$251.96

Conservative Bumper Sticker Ultimate Collection! 350+, Anti Obama Stickers!

$199.00

Anti Obama Bumper Sticker MULTI-PACK 125+ pcs!

$149.00

Tea Party Anti Obama Decal Bumper Sticker GOP 3″ x 9″ T

$140.00

Tea Party Anti Obama Decal Bumper Sticker GOP 3″ x 9″ U

$140.00

Tea Party Anti Obama Decal Bumper Sticker GOP 3″ x 9″ V

$140.00

(250) WHOLESALE ANTI OBAMA BUMPER STICKERS~REVOLT (c) LMFAO HIGH QUALITY VINYL!

$134.36

LOT OF 12 NEW ANTI OBAMA T SHIRTS 2 S 2 M 4 L 4 XL

$119.00

Anti Obama “Nobama” bumper sticker (lot of 50 stickers)

$99.00

Tea Party Anti Obama Decal Bumper Sticker GOP 3″ x 9″ Q

$75.00

Tea Party Anti Obama Decal Bumper Sticker GOP 3″ x 9″ R

$75.00

Tea Party Anti Obama Decal Bumper Sticker GOP 3″ x 9″ S

$75.00

10 Recycle anti Obama T-shirts republican WHOLESALE

$74.99

1-20-13 anti Obama conservative 10 T-shirts WHOLESALE

$74.99

NEW Obamao anti against Obama 10 T-shirts WHOLESALE

$74.99

NObama 10 T-shirts WHOLESALE anti against Obama S-3X

$74.99

NOPE 10 T-shirts WHOLESALE anti Obama S-3X conservative

$74.99

President Ronald Reagan Bills – 250 Pack – Capitalist Conservative Anti Obama

$69.95

Anti Obama “Nobama” bumper sticker (lot of 30 stickers)

$60.00

(20) 1-20-13 / NOPE anti Obama bumper stickers

$59.99

(100) WHOLESALE ANTI OBAMA BUMPER STICKERS~REVOLT (c)

$58.76

NOBAMA Barack Obama Anti President Trump Hoodie T-Shirt

$49.95

Anti Obama Black T-Shirt, with hand painted universal NO symbol!

$45.99

Tea Party Anti Obama Decal Bumper Sticker GOP 3″ x 9″ N

$45.00

Tea Party Anti Obama Decal Bumper Sticker GOP 3″ x 9″ O

$45.00

Tea Party Anti Obama Decal Bumper Sticker GOP 3″ x 9″ P

$45.00

NOBAMA Barack Obama Anti President Trump Hoodie T-Shirt

$44.95

Retro USA Flag Ron Paul 2012 President anti Obama Revolution T-Shirt Hoodie

$44.95

NOBAMA Barack Obama Anti President Trump Hoodie T-Shirt

$43.95

NOBAMA Barack Obama Anti President Trump Hoodie T-Shirt

$41.95

Anti Barack Obama OMG Must Go Funny T-Shirt Hoodie

$40.45

Retro USA Flag Ron Paul 2012 President anti Obama Revolution T-Shirt Hoodie

$40.45

Barack Obama Countdown Clock

$6.13

This Barack Obama Countdown Clock is the perfect gift for those who simply can’t wait until Obama is out of office! Are you frustrated with the current administration? Are you not stimulated by the President’s stimulus package? Instead of rioting and taking to the streets, know how many days are left before he is out of office. With this Obama countdown clock, every measurement from years to secon…

NoBama Hopey Changey Anti-Obama Mug

$15.95

Express your opinion on your coffee mug!…

I WAS ANTI OBAMA BEFORE IT WAS COOL Political 1.25 MAGNET ~ Barack

$0.01

These magnets are manufactured from the highest quality materials, made of a hard metal base, thick mylar, strong magnet and true to life vibrant colors. Put them on your refrigerator, locker, file cabinet or any metal object you can think of! Magnets are great party favors for your next gathering and also make great prizes/giveaways. They are wonderful gifts for everyone!…

Change Is Gonna Come Sessions

$8.98

Bettye LaVette stole the show at President Obama’s Inaugural concert with her impassioned rendition of Sam Cooke’s “A Change Is Gonna Come,” performed with Jon Bon Jovi. Here LaVette performs the song on her own in an intimate studio setting, along with five other classic tracks by African-American songwriters, written in the spirit of change.This product is manufactured on demand using CD-R reco…

Rock Against Bush, Vol. 1

$2.40

All products are BRAND NEW and factory sealed. Fast shipping and 100% Satisfaction Guaranteed….

Obama Song

$0.99

…

WIPE OUT OBAMA-FUNNY TOILET PAPER-MADE IN THE USA!!

$6.95

Wipe Out Obama Toilet Paper- Jumbo rolls with 450 sheets on each roll. He wiped up the Presidential election and now you can use him to wipe up your historical messes! Love him? Hate him? Either way… you’ll love this Barack Obama Funny Toilet Paper. Printed throughout the whole roll! Want to have Obama in your bathroom… YES YOU CAN have him in THE CAN!…

Anti Obama 2012 One Big Ass Mistake Political Car Window Wall Laptop Decal Sticker — White 8in X 9.2in

$8.70

Anti Obama 2012 One Big Ass Mistake Political Car Window Wall Laptop Decal Sticker White 8in X 9.2in When making your color choice please be aware that our decals do not have a background or background color at all. These are decals not stickers. . When applied all you will see is the outline as shown in the images. If the decal will be going on glass you will want to use a bright color like white…

6in X 6.9in Black — Anti Obama 2012 One Big Ass Mistake Political Car Window Wall Laptop Decal Sticker

$6.35

Anti Obama 2012 One Big Ass Mistake Political Car Window Wall Laptop Decal Sticker — Black 6in X 6.9in When making your color choice please be aware that our decals do not have a background or background color at all. These are decals not stickers. . When applied all you will see is the outline as shown in the images. If the decal will be going on glass you will want to use a bright color like wh…