From Schweser: “Recession is the fifth stage in our list. During recession, typically, the money supply will be expanded, but recovery may take time. Attractive investments during a recessionary phase of the business cycle include commodities and stocks.” Question: Is this based on what happens going into the next recovery, or does it mean that stocks and commodities are supposed to do well throughout the recession?

It means that stocks and commodities will do well if we cycle out of the recession. If you caan keep solvent and you believe that we will all recover, it’s a really nice time to buy both in the long-term. Don’t do it.

Hence the reason this doesn’t make sense - Joey says “don’t do it” at the end of the post. So why is this a recommended investment course of action in a recession if we can’t agree that it is a good course of action right now?

We are in uncharted terrority right now - this isn’t a “normal” recession. This is a credit bubble from the 1980’s - some say from the 1940’s and the butterfly effect is going to be big. We are going to witness a massive destruction of wealth in 2009. Stick to the material and the historical recessions, but again - for the markets today, this is a new world of pain and uncertainty.

Fair enough!