Financial Freedom SG

The graph on the left shows that the USA leading economic index is up again for the fourth month in a row (the red line).

This leading economic index is a good indicator of an impending recession as they have sloped downwards before a recession as shown for the December 2007 recession. The graph of the red line shows a general downward trend in the previous months in the year of 2007.

The indicators, while useful in predicting all eight of the recessions since 1957, has also predicted recessions which did not occur.

The recession if it was marked at December 2007, have already lasted 21 months, making it the longest downturn since the Great Depression.

With the start of growth, and the rising of the tide, it bodes well for investors looking for or who have already looked for long term bargains in the market.

It also signals that you should be looking to actively look for investment targets whether they are in United States, Singapore, China or in specific sectors like the financial sectors.

If you are a value investor, you probably wouldn't want to spend time looking at all these and prefer to spend your time on analysing companies, but it wouldn't hurt to know that there is such a tool like this to consider if it is a good time to rebalance your portfolio and get more or less equities.

Have a good week ahead and happy hunting for that elusive 10 bagger stock.

Sources:

1. A Beginner's Guide to Economic Indicators

2. The Conference Board Leading Economic Index Press Release on 20th August on its Fourth Consecutive Increase

3. The Conference Board

4. Leading Indicators Are Signaling the Recession's End- The New York Times

5. Leading Economic Indicators Explained from the Investor Guide