CNBC Stock Blog

Chances of Recession Are 'Well Above' 50%: Strategist


Stocks opened higher and kept climbing Wednesday following a weak close in the previous session, as investors brushed off fears over the health of European banks. How should you be positioned in this volatile market? Rod Smyth, chief investment strategist at Riverfront Investment Group, and Mike Rubino, president of Rubino Financial, shared their market insights.

The Early Tick

“What investors between the age of 50 to 70 should be worried about now is the fact that nearly three years after the market peaked, housing prices, GDP, organic personal income, outstanding credit and employment are all lower now than they were three years ago,” Rubino told CNBC.

“A highly volatile and schizoid stock market is not the place for pre-retirees—our clients are primarily in government, corporate bonds.”

And based on the dismal economic situation in the U.S., Rubino said the chances of a recession “are well-above 50 percent.”

Smyth's View:

In the meantime, Smyth advised investors to look into U.S. multinationals and emerging markets.

“I’d rather have risk capital as much as you can tolerate…with companies that are going to grow and grow their dividends,” he suggested.

Rubino Recommends:

For conservative investors: PowerShares DB US Dollar Index Bullish

For moderate investors: iShares Barclays 20+ Year Treasury Bond

For aggressive investors: ProShares Short S&P 500

Scorecard—What They Said:

  • Rubino's Previous Appearance on CNBC (May 20, 2010)
  • Smyth's Previous Appearance on CNBC (Aug. 10, 2010)

Market Views—Across the Board:

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No immediate information was available for Rubino or Smyth.