I have read a few articles about US GDP being a predictor of the direction on the stock market and how the GDP may signal a double dip recession. I have some questions arising out of this theory.
1. If we are invested for the long term (for me 5+ years) should the quarterly GDP figures have any effect on my investing for early retirement? If we have a double dip recession, do we just stay the course, and keep our monthly investing the same as we have in order to maintain our pre-determined asset allocation (stock/bond/cash mix)?
2. Assuming yes to Number 1, then if I have a set amount that I can invest on a monthly basis, if the GDP numbers turn out "bad" what should be the priority order of my investing between stocks, bonds and cash?
3. Also, if the GDP numbers are considered "bad" (not meeting expectations, or not meeting or exceeding prior quarter numbers) do bonds tend to do better than stocks in that type of environment? Or, does the return on both bonds and stocks go down in a double dip recession environment?
Thank you for your insight.