1 Thing Investors Need to Know About the IMF's Recession Warning
What's happening in the headlines can affect you as an investor. Here's what's going on, what you need to know, and what you should do.
The cold, hard facts
The International Monetary Fund, or IMF, warned today that the world's advanced economies could fall back into recession unless policymakers move with greater urgency to agree on policies to boost growth.
"Policy paralysis and incoherence have contributed to exacerbating uncertainty, a loss of confidence, and heightened financial market stress," the IMF statement reads.
This warning was meant to be issued last week at the G20 meeting in Cannes, France, but was published only today. Summit attendees were instead taken up with trying to avert a eurozone meltdown.
So now we know that meltdowns trump recessions, and also maybe that the threat of recession isn't so imminent that the warning couldn't sit around on someone's desk for a few days. That could be read as an encouraging sign.
One thing you need to know
Not to take this statement from the IMF too lightly, but the developed world already knows it's operating just a hair's breadth above recession. I don't think the IMF had anything new to add to the conversation here.
Yes, policy paralysis has contributed to greater market and economic uncertainty. Just think back to America's absurd debt debate over the summer. It was a completely manufactured crisis, one the country lost its AAA credit rating over. President Obama put it perfectly when he called it "a self-inflicted wound."
But the best hedge against market ups and downs is to be in it for the long term. We buy companies, not tickers. We're partners in the businesses we invest in, so we keep a close eye on them and check in on the fundamentals every quarter. A well-managed, financially sound company can make it through some pretty rough economic times. Coca-Cola (NYS: KO) , which has been around for 125 years, fits the bill nicely.
Remember this when you're tempted to check in daily on the share prices of your stocks or the state of the Dow (INDEX: ^DJIA) , the Nasdaq (INDEX: ^NYA) , or the S&P 500 (NYS: SPY) .
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At the time this article was published Fool contributor and newshoundJohn Grgurichloves his Reuters feed so much he wants to marry it, but he owns no shares of any of the companies mentioned above. The Motley Fool owns shares of Coca-Cola. The Motley Fool has sold shares of SPDR S&P 500 short.Motley Fool newsletter serviceshave recommended buying shares of Coca-Cola. The Motley Fool has a scintillatingdisclosure policy.
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