Nobody can measure the impact of the Mideast affair, but eventually the recession will end, the economy will get back on course and then it will cruise toward another expansion.
Based on an analysis of recession-expansion data since World War II, that expansion may run anywhere from nine months to 105 months, during which time the economy could grow between 3.4 percent and 4.1 percent a year.Those are the facts, and this is the challenge: As an investor immersed in the grimness of these days, are you willing to anticipate an economic upturn? Are you prepared to risk your money on the stock market?
These are tough decisions for ordinary Americans, who are not much in the mood for such considerations, and not inclined to take risks when the timbers beneath their foundation are creaking.
For the professionals, it is another matter. They know there are cyclical stocks - stocks that weaken and strengthen with the economy - and they know that if they are lucky they can ride some of those stocks to riches.
But even for them, the choice is a tough one: How do you decide when the focus of hopes and ambitions retreats from five-year goals to immediate survival?
But that's how some succeed - by doing what others won't do or cannot do.
"The best time to buy stocks is at the midpoint of an economic recession," says Gerald Perritt, whose knowledge of the statistical aspects of investing is second to none.
It is at that time, you might observe, when the gloom is deepest, when hopes are abandoned, when surviving the day rather than enjoying the future is the preoccupying consideration.
If you believe in the averages, and if you assume the recession began at the end of September, then you might conclude that this recession could approach its greatest depth sometime in March.
If the assumption is correct, some cyclical stocks could very well be bought now.
Perritt, a mathematician and former college professor who now manages portfolios, advises the Perritt Capital Growth Fund and publishes investment letters, explains that cyclicals fall early and rise early.
"Their stocks are not only the first ones to plummet when economic growth begins to wane, they are hit the hardest as investors begin to stampede for the exits.
"Similarly, since investors look to the future when assessing investment potential, these stocks begin to turn upward at the depths of an economic recession, since investors look beyond to the impending recovery."
These are prominent cyclicals: airlines, automotives, building materials, leisure time companies, and manufacturers of paper and forest products.