Browsing: Global recession

In times of economic volatility like during a recession cash king. Cash provides investors with a buffer to absorb the shocks that may comes from a bad economy but also the ability to take full advantage of the opportunities that are sure to arise as investors run for the doors.

Shrewd investors who realize this will always make cash or dry powder provisions in their investment portfolios. They do this by keeping cash in their brokerage or bank accounts or investing in near-cash securities like money market accounts and certificates of deposits.

Cash is important because in a recession good quality securities and investments can be bought for knockdown or bargain basement prices. This can only be realized if an investor to begin with did not lose their nerve at the prospect of a recession and secondly decided to keep a significant portion of their portfolio in cash.

The high-interest rates have made the United States dollar more appealing to investors who are piling into the greenback. The value of other currencies has tumbled: the pound, yuan, euro, and the yen. This depreciation in other currencies makes imports for these countries more expensive in United States dollars. The case for a recession caused by a strong dollar is grimmer in Africa where just about every country on the continent is overextended in terms of United States dollar-denominated borrowings.

Repaying loans in hard currency will be more expensive, especially where their currencies are rapidly depreciating.

The strong US dollar according to CNN has a destabilizing effect on Wall Street.

Companies listed on that bourse conduct business internationally, and a strong dollar will negatively impact their earnings. The second marker of the global economic recession is that US economy is slowing down or stalling. The world’s largest economy is driven by consumption.