You may think that surviving and prospering during a recession requires having a lot of money to begin with, but the most important element in successfully surviving a recession is to have the proper attitude.

You must believe you are capable of surviving an economic recession.
You must believe that you are smart enough to do so.
You must plan ahead and be prepared to face problems and obstacles. .
You must use your instincts to decide what path to follow.
You must have faith in yourself and in God.
You must be willing to make an effort.
You must come to grips with reality.

It is not going to do you any good to sit back and wait for what you presume are the inevitable consequences of a recession.
You have to take action even before the event occurs.

Start saving as much as you can.
Eliminate high interest rate credit cards.
Refinance your mortgage on better terms.
Stop spending on luxuries.
Stop trying to live up to your neighbors.
Stop buying only brand name products.
Make sure you and your loved ones are properly insured.
Prepare to switch jobs.
Prepare to learn how to work from home.
Prepare to rely on your talents and interests.
Redefine the difference between needs and wants.
You may want to have a new car, a fancy new outfit, or a bigger home. That doesn't mean that you need to have those things.
You can do with less and still be happy. You can learn to do more with less.
You can learn to be master of your own soul.
You can learn to be your own boss.
Take the time to analyze what your interests are, and what you are good at. Don't overlook your hobbies. Some of these things can provide you with the basis for forming your own work at home business.
Be prepared that in an economic recession things are not going to be the same as they were.
Be prepared to change the way you do things.

Be prepared to survive and prosper. There is no magic formula. How well you survive and prosper during an economic recession depends on your ability to say to yourself - "Yes I Can."

Abstract: Why do we have recession?
The cause of recession is explored using a thought experimentabout the smallest economic unit capable of experiencing recessions.This is characterised as a trading village. The paper argues thatrecession is triggered by inadequate or poorly judged adaptation toever-changing market conditions. A computer simulation of the modelis proposed to determinewhether the drift into recession is gradual or subject to a tipping point.

Surviving A Recession

When the major stock market averages declined by 10% from their 2007 highs on Monday, we were in official market correction. Sentiment is negative owing to the economic back drop of, at best, tepid growth according to the Fed, or a recession.

Consumers twenty-five credit binge fueled by home equity loans, credit cards arriving in the mail, sub prime and adjustable rate mortgages and automobile leases, appears to be over. Savings rates has plummeted from 14% to 0% (perhaps to a negative number if home values continue to decline). Pile on top of that the banks debt problems, high energy prices, the homebuilding industry 's woes, weak retail sales and declining consumer sentiment, it 's no wonder that many investors believe a recession is in the offing.

Investors face two challenges right now. If the economy is headed into a recession, where do I put my money? And, if the economy avoids a recession will I be in the right investments? The stock market anticipates the future. It will decline prior to the US entering a recession and it will start going up prior to the end of the recession.

Investors who wait for certainty that a recession has begun will be selling stocks at the worst possible time. The same logic holds true if you wait to buy stocks until after the economic recovery, the market will have already moved higher in anticipation. Human psychology is a future complication. We're most optimistic about the stock market when it 's roaring ahead and most inclined to buy; and most pessimistic and most inclined to sell, when it 's at its bottom. Of course, our investment strategy should be just the opposite. The moral to this story is that you should invest for the long term and not try to time the market.

If a recession is imminent, the stock market will decline by another 10%. How do you make money? To get technical, buy mutual funds, ETFs and stocks with negative betas or high alphas, such as gold, commodities, real estate and foreign stocks.

Gold and commodities already have had good runs, the US commercial real estate market appears to be weakening and foreign economies are increasingly becoming intertwined with ours. Non-investment grade bonds have good yields but are not the place to be given the continuing bank credit problems. High grade bonds and Treasures have relatively unattractive yields, particularly as you go out in maturity.

The best performing stocks in a recession are likely to be industry leaders, companies with strong overseas sales, consumer staples and health care. The technology sector is solid and internationally focused, so we'll add it to our list. Essentially we're looking at companies whose sales will be strong during a recession. These stocks may not go up in price during a recession but they will perform relatively better than most other equities and are safe investments. The bottom line is it 's hard to make money during a recession.

If the Fed is right and we'll see modest economic growth in 2008, the markets are at their lows and could move 20% higher over the next six months. How do you position your investments for this possibility? By staying in the market and buying the same mutual funds, ETFs and stocks as you did for your recession portfolio. The recession portfolio is a conservative portfolio. Although it will miss some of the dramatic gains made by small cap and more violate stocks, it also protects you from the downside of those stocks while enabling you to participate in any stock market rally.

What to do now? Review your long term goals and make sure you've got the right asset mix, take losses (up to $3,000 more than your gains, remembering to match short term gains and losses) to minimize your taxes, reposition your equity investments according to our recession scenario, move your bonds into cash and tighten your seatbelt. We're in for a bumpy ride.

2008 Economic and Investment Outlook

The economy faces serious challenges in 2008: 1. New home sales are at a 16 year low and may go lower; 2. Inflation will be high for the next few months as energy and food prices work their way through the economy; 3. Retail sales will be weak, as evidenced by the Christmas season; 4. Illiquidity in the credit markets will spread from mortgages to auto loans and credit cards due to financial companies tightening their lending standards; 5. Adjustable rate and subprime mortgage problems will continue; 6. Corporate profits will turn negative.

These factors will contribute to, but not cause, the 2008 recession and they will be somewhat mitigated by strong export demand (thanks to the weak dollar) and, at least for the time being, good unemployment numbers.

The decline in the value of existing homes is what will cause the 2008 recession and cause it to be the most severe recession since the early 1980s (although not all that bad by historical standards). The bulk of the average American 's savings is in their home and their net worth is decreasing.

There will be far fewer mortgage refinancings and home equity loans to monetize housing values. Declining housing values will cause/force consumers to cut back spending. Existing home prices were down 3.3% for the twelve months ending in November. Although sales were up slightly in November, they're still down 20% from a year ago. Record levels of foreclosures and mortgages which rates adjust in 2008 make it unlikely the November up tick will be sustained.

There will be no economic recovery until housing prices bottom. The Fed will cut rates to combat the economic downturn but financial institutions stricter lending standards will mitigate the impact of the Fed 's actions. Thus, we should expect up to four quarters of negative economic growth. Morgan Stanley, in their December 10 Strategy piece, looked at historical stock market declines and concluded that, on average, the S&P declines 9.5% from its peak to the start of a recession, 18% from there to its bottom, then rebounds by 25% through the end of the recession.

The S&P (and the Dow and NASDAQ) is off about 5% from its 2007 high. This suggests another 23% decline until it reaches its recessionary low. Forecasting is not an exact science (far from it) and the U.S. economy has proven to be remarkably resilient. Also, the S&P is trading at a reasonable level, based on its P/E ratio, so maybe the decline will be less this time, say 15% from current levels. How do you invest for a recession? For stocks and mutual funds look for companies which sell consumer necessities, heath care companies, companies with large foreign sales, high dividend (make sure its secure) stocks and invest internationally.

Bonds typically perform well during recessions because of falling interest rates. But with Treasury yields already low and the uncertainties surrounding corporate bonds, you would be wise to keep your fixed income investments short-term until the credit situation resolves itself. What you shouldn't do, though, is get out of the stock market.

The U.S. will come through this recession as it has every other and economic growth will drive the stock market to new highs. As the Morgan Stanley report points out, the stock market rises sharply prior to the end of a recession and nobody can pick the turning point. Lastly, although I don't advocate market timing, I'd put new 401-K and IRA contributions into cash for the time being. Cash is king in times like these.