Five Questions with Rich Greifner

Rich Greifner is a senior analyst with The Motley Fool and writes about investing for the company’s Web site, motleyfool.com. One of his recent articles raised questions about whether or not a recession is always negative for the stock market. Greifner recently spoke with Amy Eagleburger of businessjournalism.org about the media’s coverage of the economic slowdown and what business journalists can do to better inform their readers about the “R” word.

1. What are some misconceptions about recessions that business journalists might be furthering in their coverage?
My biggest pet peeve about the recession coverage: the assumption that a recession will necessarily spell doom for U.S. stocks for the foreseeable future.  This simply isn’t true. As I pointed out in my article, the U.S. has experienced 11 recessions since 1945, and the stock market actually rose during seven of those periods.

2. Is it possible for the U.S. to come through this slump without ever technically being in a recession?
Sure, I guess. We might be in a recession already. We may never enter one.  It’s really just a classification employed by a bunch of economists.

3. Do you feel like coverage has been too negative or too positive on the current economic situation?
The coverage has been negatively skewed because that’s what readers are responding to right now: Fear. At first blush, “recession” is a very scary term, especially after the long period of prosperity we’ve just experienced.  Once you dig a little deeper, you realize a recession isn’t that bad – it’s a natural part of the business cycle.

4. Does the classification "recession" really mean that much?
I think the recession classification is meaningless. By the time the National Bureau of Economic Research determines that we’re officially “in a recession,” odds are the economy will already be rebounding.

5. What would make current coverage of the economy better?
I’d love to see the financial press adopt a longer-term perspective. This fixation on short-term economic indicators has really spooked individual investors. That’s especially unfortunate because I think there are a lot of quality companies trading at enticing valuations right now. I’d like to see more positive stories – something like: Here are a few companies that will emerge stronger from a recession, or a few companies that have been excessively punished.

Copyright © 2008 Donald W. Reynolds National Center for Business Journalism