How to Invest for an Economic Rebound

When you rebuild your portfolio, the shape of an economic recovery--V, U or W--is as important as the timing

Shannon Stapleton / Reuters

Traders work on the floor of the New York Stock Exchange, May 7, 2009.

Here's the not-so-bad news: We are nearing a bottom. Housing prices are falling, but not as rapidly. Consumer confidence is up. Banks are earning money. The stock market in April had its best month in nine years. Even Nouriel Roubini, the New York University professor known for his dire economic predictions, thinks we are on the mend. Sort of.

That's not to say the recession is over. Roubini sees the road to recovery as a long and choppy one, with unemployment rising toward 12%. So don't trade in your emergency fund for a boat. But when it comes to your investing...

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