Is A Worldwide Recession Looming?

"The four most expensive words in the English language are, 'This time it's different.'" 
-- Sir John Templeton

A. Gary Shilling is predicting a worldwide recession caused by the housing crisis, credit crisis, and weak U.S. consumer spending.  From my last post, U.S. consumer spending is 20% of world GDP.  

He believes this recession will be the worst one after World War II.   

Recently, Japan has shown negative growth as they are an export nation.   Maybe it's already happening.   Europe is also starting to have problems.  

Shilling believes hotels, restaurants, consumer electronics, airlines, Starbucks, carmakers, fashion, etc. will all suffer.   Therefore, he doesn't recommend holding stocks in these companies.   

This makes sense.  If there is a recession, do you go to Hyundai Department Store or E-mart?   Will you sleep at an expensive hotel or take an expensive vacation?    

Be careful.  Stocks and other investments take a tumble during a recession.  

Be brave.   One of the best times to invest in stocks is also during a recession.  Not in the beginning though, you have to wait 6-12 months later when everyone realizes the economy sucks.   And everyone is feeling depressed.  Buy at the point of maximum pessimism, Sir John (Templeton) would insist.

What should you do?  Save as much cash as possible, because I also think a pretty bad recession is coming.  If you are going to graduate in 6-12 months, you better find a job as soon as possible.   Most companies do not hire a lot of workers before a downturn and freeze hiring during a recession.