Author Topic: I cant see the recession yet, pass me the glasses. Recession in 2 years?  (Read 11427 times)

bthewalls

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Hello everyone.  I'm fairly new at this and have recently got obsessed with studying the US/global market trends.

I get the feeling the current Asian market slow down will domino across uk/Europe and slightly into the US market. Employment is still high and interest rates relatively low.  The markets show mass exodus anytime there is a dip recently, so everyone is still super sensitive after 2008.

Combined with fed rates going up a bit and the trade war, is it possible we might experience a substantial correction and avoid the brutal recession everyone is waiting for?

First post.... its only a day since I last shaved and barely have 5 o clock yet.

Barry

YttriumNitrate

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #1 on: October 25, 2018, 06:03:24 AM »
Hello everyone.  I'm fairly new at this and have recently got obsessed with studying the US/global market trends.
I remember when I first got interested in finance...I watched Jim Cramer, read the Financial Times, check my portfolio on a daily basis, and did some stock picking. After a while, I came to the conclusion that "nobody knows nothing" really is true.

Sure, it's possible that a substantial correction is imminent, but don't forget that people were making the same predictions in 2010, 2011, 2012, 2013, 2014, 2015, 2016, and 2017. Instead of "fed rates and trade war" we had fiscal cliff, government shutdown, Zika, Trump election, Korean nukes, Clinton Election, quantitative easing, and so on and so forth as the fears de jour back then.

DS

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #2 on: October 25, 2018, 08:45:36 AM »
Hello everyone.  I'm fairly new at this and have recently got obsessed with studying the US/global market trends.
I remember when I first got interested in finance...I watched Jim Cramer, read the Financial Times, check my portfolio on a daily basis, and did some stock picking. After a while, I came to the conclusion that "nobody knows nothing" really is true.

Sure, it's possible that a substantial correction is imminent, but don't forget that people were making the same predictions in 2010, 2011, 2012, 2013, 2014, 2015, 2016, and 2017. Instead of "fed rates and trade war" we had fiscal cliff, government shutdown, Zika, Trump election, Korean nukes, Clinton Election, quantitative easing, and so on and so forth as the fears de jour back then.

I studied Finance and I would read the WSJ / Financial Times / Bloomberg almost daily, and would play with stock picking in simulations. Learned quickly how the analysis was never as clear as it seemed and how reading the news is basically "old data" by the time it's released.

sol

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #3 on: October 25, 2018, 09:20:15 AM »
I get the feeling the current Asian market slow down will domino across uk/Europe and slightly into the US market.

Maybe!

And that's the best anyone can say.  I think I'm a pretty smart dude, but whenever I think I've had some great insight into the market I remind myself that there are literally ten thousand ivy-educated business professionals who see this data before I do, and they each get paid hundreds of thousands of dollars per year to have contingency plans in place to execute instantly whenever new data is released.  My insights, as revelatory as they may seem to me, are already documented in a white paper somewhere that games out all of the cascading consequences of each observation and the ways it might interact with other insights.

So you think the Asian markets are slowing and the Euro market will soon follow suit, with a lesser impact to the US market?  Why?  What is the mechanism of that interaction?  Have you considered the differences in changing demographics and market segments across those economies?  Which industries will first see the impacts of the trade wars and tariffs, and to what extent?  Will oil prices contribute to this hypothesized connection, or offset it?  What's the time lag?  What are your top five proposed strategies for profiting from these interactions, and how will you decide to apportion your assets toward each strategy and then adjust between those strategies as the events play out?  What metrics will you look at to make these decisions?  I can absolutely guarantee you that every major investment bank has an army of Ph.Ds. who have already written all of this stuff out and traded it around for review and feedback.  These guys are serious about their jobs, and they have access to data and analytic tools and markets that you and I do not.  We're just armchair quarterbacks, and these guys are Tom Brady and Aaron Rodgers playing on the same team, backed up with billions of dollars of team resources.

Quote
Employment is still high and interest rates relatively low.

Relative to what baseline?  For what reasons?  Are those reasons going to be present next quarter, next decade?  Are there other factors that might impact these metrics that you haven't seen coming?  Which industries do these metrics most substantially control, and are you playing those industries as opposed to the market as a whole?

Quote
First post.... its only a day since I last shaved and barely have 5 o clock yet.

I'm not trying to rag on the new guy.  I always commend people for trying to learn, it's just that predicting global stock markets is a silly game.  It's easy to think you're good until you jump in and get fleeced, because most of us don't know just how much we don't know.

And that's the reason this community typically advises against market timing and stock picking.  You're guaranteed to not do any worse than average, and that's a better result than you can reasonably expect to get with any other strategy.

MustacheAndaHalf

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #4 on: October 25, 2018, 09:24:40 AM »
It starts 2 years from now, meaning on exactly October 25th of 2020?
If you hadn't planned on being that specific, consider what that says about your information.

You also need to predict when the recovery kicks in.  If you sell everything, and then wait out both the crash and recovery, you didn't benefit at all from the prediction.

ketchup

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #5 on: October 25, 2018, 09:28:51 AM »
What sol said.  Us humans are very bad at predicting the future, even the ones that are good at it. 

Go back and look at financial news from two years ago.  Was anyone predicting anything crazy correct? 

Everyone was crying about how the market would crash when Trump was elected; that happened, right?

GuitarStv

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #6 on: October 25, 2018, 09:30:18 AM »
Don't time the market.  Buy and hold all of the market.

nereo

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #7 on: October 25, 2018, 09:35:04 AM »
I get the feeling the current Asian market slow down will domino across uk/Europe and slightly into the US market.

Maybe!

And that's the best anyone can say. 

Morgan Housel wrote a great article about this several years ago (linked below).
Short version: Every year 22 "chief market strategists" from the largest, best-funded investment firms put out their forecasts for the following year.  These guys (I believe they are all men) have missed each of the last five down market years. In 2008 each predicted above-average market gains when we had our biggest crash in half a century. Collectively they did WORSE than if you had just guessed the market would return its historical average of ~9% each and every year.



my point?  The guys who are paid 6+ figures to predict where the market will be in 6-12 months are fantastically bad at predicting crashes.  You or I have no hope.  Luck is the determining factor for 'correct' predictions. Unforseeable events can move markets, and seemingly 'bad' metrics can carry on for years before their effect is felt.

https://www.fool.com/investing/general/2015/02/25/the-blind-forecaster.aspx
« Last Edit: October 25, 2018, 09:37:02 AM by nereo »

bthewalls

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #8 on: October 26, 2018, 02:46:12 PM »
Thanks all....it's seem to be a case of buy and non sky high prices and just hold.




maizeman

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #9 on: October 26, 2018, 04:04:00 PM »
That is an awesome chart/study @nereo. I hadn't seen that one before, thank you for posting.

FIRE 20/20

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #10 on: October 27, 2018, 10:41:02 AM »
That is an awesome chart/study @nereo. I hadn't seen that one before, thank you for posting.

What maizeman said - thanks @nereo .  I really don't mean to pile on the OP - it's great you are learning more about finance!  But it simply cannot be said enough times - some of the biggest brains in the world are using incredibly powerful computers running software that brilliant and knowledgeable people have spent entire careers creating to get microsecond advantages over other big brains using powerful computers running complex software...and you think you're going to find something they missed?  No fucking way.  Just...no.  While it's true you might get lucky (and I'm sure you know someone who sometime got lucky once or twice with a great stock pick or getting in/out at the right time) - luck is a losing strategy.  Because the markets always go up over the long term and because there are transaction costs and taxes, luck will always lose out most of the time to just buying, holding, and ignoring. 

nereo

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #11 on: October 27, 2018, 11:42:51 AM »
I appreciate the kudos, but the praise all should go to finance writer Morgan Housel.  It's his graph and analysis, all I did was read it and summarize it here.

~n~

JAYSLOL

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #12 on: October 27, 2018, 12:03:12 PM »
Keeping modestly informed of relevant local and global news is one thing, but developing an entertainment dependence habit on financial news and global affairs is extremely detrimental to both your own mental health and financial well-being.  Write an IPS if you don't have one and follow it to the letter no matter what you hear on the news

http://www.mrmoneymustache.com/2013/10/01/the-low-information-diet/

pecunia

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #13 on: October 27, 2018, 01:19:24 PM »
Keeping modestly informed of relevant local and global news is one thing, but developing an entertainment dependence habit on financial news and global affairs is extremely detrimental to both your own mental health and financial well-being.  Write an IPS if you don't have one and follow it to the letter no matter what you hear on the news

http://www.mrmoneymustache.com/2013/10/01/the-low-information-diet/

I hate acronyms.  Luckily I hit IPS on the first try.  Investment Policy Statement.  So I read a description.

https://www.thebalance.com/how-to-write-an-investment-policy-statement-357210

It seems like a good idea, but I was surprised to see the criticism in the description of index funds.  The man in the article talks about the development of a portfolio to give you $5k / month to augment Social Security.  People on this site have written time and again to use index funds since they are as good or better than using a financial advisor.

It seems most of the folks here think a big recession won't come for a couple of years.  This eases my mind.  I don't have an IPS, so I guess I'll ride this out.

I don't totally ignore the news, but I'm getting better at ignoring it.  When talk comes of the economy, I look at the price of oil.  It fell and there seems to be plenty so this seems to keep the economic machine humming.  Besides, we've been finding all kinds of new oil on the North American continent.  Brief bumps in supply and demand look like all we'll see unless there is another war.

OK - the tariff thing.  I'm sort of a believer that we ought to keep people gainfully employed producing stuff here.  The US is a big country, with lots of raw materials and has an educated free workforce.  Mr. Trump has slapped quite a list of stuff to be tariffed:

https://ustr.gov/sites/default/files/enforcement/301Investigations/Tariff%20List_09.17.18.pdf

I'll bet there are people ready, willing and able to fill the needs previously occupied by the Chinese.  People have the choice to pay a little more for the import or to support someone here to supply the same or similar item.  The money spent on said item stays here generating domestic jobs and further spurring demand.  There will be an adjustment period, but when I see the vast amount of manufactured goods that used to be made here,.................lots of jobs to be reclaimed.  Lots of needs to be filled domestically.

I was taught in macroeconomics class long ago that mutual trade between countries if conducted in a fair manner benefits both countries.  Then I saw the closure of steel mills, automotive manufacturers, etc and the ripple effect to all the sub-suppliers.  Entire cities never recovered.  It wasn't good for them.  The macroeconomic theory ignored the human cost.

I don't like Trump, but maybe his tariffs will actually be good for the economy after some adjustments.

People still have to eat.  People still want to buy stuff.  People are willing to work.  I guess it won't be too bad a dip.  (Knock on wood.)



Cabaka

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #14 on: October 27, 2018, 07:38:29 PM »

in addition to the fed continuing to raise rates and extract money from the market, you now have mortgage applications and new and used cars sales declining and the prices of houses for sale in some markets starting to drop.

maybe motgage apps and car sales turn around but unlikely with raising rates and if that continues; a recession is likely to follow.

I still contribute regulary to my 401k but I switched some to bonds on oct 9, sure it'll come back eventually but meanwhile you lost that time to get it back there by riding it down, I just do not understand how that concept is discarded by most here.

JAYSLOL

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #15 on: October 27, 2018, 08:46:01 PM »
You gotta decide what kind of investor you are going to be, the kind that sets asset allocations in a ratio of stocks/bonds that you feel comfortable with long term and sticks to it through the highs and lows, or the kind that changes their assets every time the Fed does something, financial pundits say something or global somethingorother happens.  The vast majority of people here, as well as every study I've seen on the topic agrees that the first type is the best way to go. 

MustacheAndaHalf

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #16 on: October 27, 2018, 11:05:53 PM »
It seems most of the folks here think a big recession won't come for a couple of years.  This eases my mind.  I don't have an IPS, so I guess I'll ride this out.
I'm not sure where you drew that conclusion, but nereo's graph was intended to show that experts can't predict what happens for one year.  And the rest of us have even less information, let alone predicting 2 years in advance.

Steeze

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #17 on: October 28, 2018, 06:55:29 AM »
Recession / bear market can happen at any time. Might have already started, who knows? Certainly looks that way around the globe.

So how do you handle this. If you invest today and the market drops 50%, you would have been better off in cash.

Answer: only invest what you can afford to lose.

Create a budget that includes all of you expenses for a year. Build up an emergency fund. Invest all money that you don't need this year or isn't needed to top off the emergency fund.

Then don't worry about that 50% drop. Just focus on investing as much and as often as possible. The numbers in your account will go up and down, but you will hit a reasonable average overtime.

Especially if you are just getting started. If you have 50k invested and lose 25k that feels bad, but someday you will have 1MM invested. At that time your account will fluctuate by 25k everyday.

nereo

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #18 on: October 28, 2018, 07:45:11 AM »

It seems most of the folks here think a big recession won't come for a couple of years.  This eases my mind.  I don't have an IPS, so I guess I'll ride this out.


Lordy lordy lordy.  That's not what I (or most) people here are saying at all.  I have no idea whether a big recession will come sometime in the next couple of years, and neither do the best and brightest financial minds.  Recessions happen, and we haven't had one in a long time.  That's about all I am going to opine on the subject.

As for "I don't have an IPS, so I guess I'll ride this out" - why not make one?  Seriously, it's a useful thing to do and takes just an hour or so.  Mine fits on a single sheet of paper.  Anytime I question whether I'm making the right decisions I go back and read it, and I realize that while I can't control all the outcomes I can control my strategy, and my strategy is sound and well formulated for my goals.


I was going to comment on the tariff comments, but then it occurred to me that its only tangentially related to the OP. Certainly could be discussed at length in another thread.  All I'll say here is that the current tariffs are just another example on how it's virtually impossible to predict where the markets will be in 12 months.  Tariffs could end, tariffs could escalate.  No way of knowing where we will be in 3 months, let alone 12.

PizzaSteve

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #19 on: October 28, 2018, 09:25:46 AM »
I've attended several talks with leading analysts and economists this year (since retired, I have the time, moderately big stash at 3 brokers, I get invites).  The data suggests that the economy is still very strong, so relatively high valuations are justified until that changes.

Could it change, sure.  Our president is still pursuing stupid trade policies, war and terrorism can always make news and scare people, and the global economy is a fragile flower built on our interdependent addiction to stuff we dont need (and some stuff we do).

That said, we are interconnected in ways never before possible, so people are understanding each other and sharing globally, technology marches on and we are unlocking the very keys to life (I get Facebook posts from over a dozen countries from friends).  Surely new, great stuff is on the waythat will spur growth.

Which will it be, recession or growth or neither?  That is the fun of speculation about the future.  What does your investment statement say you should do?  Buffet and Bogle suggest buy and hold long term as working historically.  If you think history holds, seems good.  If you think not, you gotta do what you gonna do,  Its your life.

nereo

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #20 on: October 28, 2018, 10:20:25 AM »
I don't want to beat a dead horse here, but the 'leading analysts' predicted better than average growth for 2008 a year prior.  We had the 'great recession'.  Earlier they predicted stellar gains in '01 and '02 - which was a big bear market and another recession.

There's a common thread about down years - analysts were optimistic about the future the previous year. It's actually how we get into these boom-bust/market bubble cycles. The financial sector looks at one series of data and gets optimistic about the next 6-12 months. Then soft spots are revealed and black-swans land, and it swings in the other direction.  Irrational exuberance and spooked investors.

This isn't to say 2019 won't be a fantastic year - it very well may be.  But the best and brightest have yet to show any aptitude for predicting downturns 6-12 months in advance.

FIRE 20/20

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #21 on: October 28, 2018, 11:46:49 AM »

in addition to the fed continuing to raise rates and extract money from the market, you now have mortgage applications and new and used cars sales declining and the prices of houses for sale in some markets starting to drop.

maybe motgage apps and car sales turn around but unlikely with raising rates and if that continues; a recession is likely to follow.

I still contribute regulary to my 401k but I switched some to bonds on oct 9, sure it'll come back eventually but meanwhile you lost that time to get it back there by riding it down, I just do not understand how that concept is discarded by most here.

I'm not sure I understand what concept you think is being discarded by most people here.  If you're saying that people are discounting the fact that it would be better to get out of the market before it falls and then get back in at the bottom - I think everyone agrees.  However the point that I think most people are trying to make is that we have no idea when the right time to get out is and when the right time to get back in is.  As nereo's chart shows even the experts don't know and you and I know a lot less about what's coming than they do.  Check out the Top is In thread.  I quickly went through a few years of posts to find a couple of posts where people were worried about the markets on this forum in the past few years.  For reference, the S&P 500 is now at about 2600, give or take.  Here are a few with the S&P 500 value at the time (rough estimates - I didn't want to put in much work so I just moused-over an S&P 500 chart.  Should be close enough to get the point.):

October 2012 - S&P500 - 1400 https://forum.mrmoneymustache.com/investor-alley/investment-planning-for-the-'fiscal-cliff'/
January 2014 - S&P500 - 1800 https://forum.mrmoneymustache.com/investor-alley/market-top/
November 2016 - S&P500 - 2100 https://forum.mrmoneymustache.com/investor-alley/index-fund-'bubble'-about-to-burst/

Now that's not to say that I think everything's going to go up smoothly from here.  You might absolutely be correct, and there might be a minor, moderate, or huge drop tomorrow.  Or next week.  Or in April of 2019.  Or July 15th 2020 at 11:37 eastern time.  If we make enough guesses one of us will be right and will be able to say that market timing worked for me while everyone who picked a different day and missed out on the run-up or stayed in for the drop will stay silent.  But the markets go up 2 years out of every 3, so every time you pull your money out you're more likely to miss out on growth than you are to get out before a drop.  The drops are part of the ride - buck up and be thankful for the buying opportunity when it shows up. 

http://www.mrmoneymustache.com/2017/06/20/next-recession/


nereo

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #22 on: October 28, 2018, 12:32:31 PM »
Or in April of 2019.  Or July 15th 2020 at 11:37 eastern time.
Phew, just put in a sell order for all my shares for 9:30am on 7/15/20. thanks @Fire20/20!

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #23 on: October 28, 2018, 01:56:44 PM »
bthewalls,

The most compelling evidence that even experts can't effectively time the market is Warren Buffett's recently concluded 10-year, million dollar bet that a low-cost Vanguard S&P Index Fund would beat any 5 hedge fund portfolio.  The hedge funds have the advantage of being able to time the market, invest in any vehicle, sell short, leverage with options, etc.  It says a lot that only one hedge fund manager was willing to take the bet.  Even with all those advantages, that manager got his clock cleaned. 

I'm not saying that you should always be 100% invested in stocks, but that your allocation should be based on factors that you can accurately assess such as your own tolerance for risk and your own timeline for needing your money.  Nobody consistently times the market successfully. 

FIRE 20/20

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #24 on: October 28, 2018, 02:53:12 PM »
Or in April of 2019.  Or July 15th 2020 at 11:37 eastern time.
Phew, just put in a sell order for all my shares for 9:30am on 7/15/20. thanks @Fire20/20!

No problem, and as a bonus I guarantee all of my market predictions up to the full amount you paid me for them.  :D

pecunia

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #25 on: October 28, 2018, 08:31:18 PM »

It seems most of the folks here think a big recession won't come for a couple of years.  This eases my mind.  I don't have an IPS, so I guess I'll ride this out.


Lordy lordy lordy.  That's not what I (or most) people here are saying at all.  I have no idea whether a big recession will come sometime in the next couple of years, and neither do the best and brightest financial minds.  Recessions happen, and we haven't had one in a long time.  That's about all I am going to opine on the subject.

As for "I don't have an IPS, so I guess I'll ride this out" - why not make one?  Seriously, it's a useful thing to do and takes just an hour or so.  Mine fits on a single sheet of paper.  Anytime I question whether I'm making the right decisions I go back and read it, and I realize that while I can't control all the outcomes I can control my strategy, and my strategy is sound and well formulated for my goals.


I was going to comment on the tariff comments, but then it occurred to me that its only tangentially related to the OP. Certainly could be discussed at length in another thread.  All I'll say here is that the current tariffs are just another example on how it's virtually impossible to predict where the markets will be in 12 months.  Tariffs could end, tariffs could escalate.  No way of knowing where we will be in 3 months, let alone 12.

Make an IPS - good idea.  I guess I will find a few more links as time permits. 

Another tidbit:

The average correction for the S&P 500 since World War II lasts four months and sees equities slide 13 percent before bottoming.
But bear markets average a loss of 30.4 percent and last 13 months; it takes stocks nearly 22 months, on average, to recover.

OK - Lots of that money I never really had because it came from the stock market run-up.  So, I may need to wait about 2 years to get the money I never really had back - I guess I can live with that.

nereo

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #26 on: October 29, 2018, 05:41:49 AM »

The average correction for the S&P 500 since World War II lasts four months and sees equities slide 13 percent before bottoming.
But bear markets average a loss of 30.4 percent and last 13 months; it takes stocks nearly 22 months, on average, to recover.

OK - Lots of that money I never really had because it came from the stock market run-up.  So, I may need to wait about 2 years to get the money I never really had back - I guess I can live with that.

Correct.  Understanding these things are the first step in becoming a seasoned, long-term investor.  The markets are going to hit the skids a couple times every decade or two.  Most of the time its a 'correction' that will pass a few months later.  Bear markets are much deeper and last longer, but in the grand scheme of a life-long invester they are short lived.  The key is to ignore all the talking heads on TV and the panic in the market and do nothing.  Don't sell, and keep putting money in every pay period.  It can be hard when your portolio drops 30% from the previous year, but in the end the investors who do the best tend to be the ones who just ignore everything and stay the course.  Market dips allow you to buy shares on sale.

Despite the lure, you cannot predict when a hot market will suddenly collapse, and you cannot determine whether a recent dip is just a correction or will continue down into bear-market territory until it's all over. In hindsight it appears obvious, but it never is in the moment, partly because the markets can ignore good or bad news for months (even years) before it suddenly flips on you.

Final advice: read this series from JL Collins.  It explains much of what we've discussed here.
https://jlcollinsnh.com/stock-series/


magnet18

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #27 on: October 29, 2018, 12:35:00 PM »
Love the jlcollinsnh series, straight simple truth


My IPS is one line
"Buy total market index funds with all available income."

There is no selling
There is no redistributing
There is only the US total stock market and it's inevitable upward trend.  If the United States collapses as a whole, I'll invest in ammo and potatoes.

nereo

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #28 on: October 29, 2018, 01:02:08 PM »

My IPS is one line
"Buy total market index funds with all available income."


Good for the accumulation phase, but worth considering what you will do once you start making withdraws.
e.g. %WR, frequency of disbursements, at what point do you reduce spending or add supplemental income, philithropic strategies,  what to do with windfalls/unspent money, establishment of bond ladder (if any).

Build a nice potato gun, just in case you run out of bullets :-P

magnet18

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #29 on: October 29, 2018, 01:15:06 PM »

My IPS is one line
"Buy total market index funds with all available income."


Good for the accumulation phase, but worth considering what you will do once you start making withdraws.
e.g. %WR, frequency of disbursements, at what point do you reduce spending or add supplemental income, philithropic strategies,  what to do with windfalls/unspent money, establishment of bond ladder (if any).

Build a nice potato gun, just in case you run out of bullets :-P


You're correct, I'm in the beginning of the accumulation phase
There will be a couple more lines to add when I reach the withdrawal phase

Cabaka

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #30 on: October 29, 2018, 08:48:47 PM »

in addition to the fed continuing to raise rates and extract money from the market, you now have mortgage applications and new and used cars sales declining and the prices of houses for sale in some markets starting to drop.

maybe motgage apps and car sales turn around but unlikely with raising rates and if that continues; a recession is likely to follow.

I still contribute regulary to my 401k but I switched some to bonds on oct 9, sure it'll come back eventually but meanwhile you lost that time to get it back there by riding it down, I just do not understand how that concept is discarded by most here.

I'm not sure I understand what concept you think is being discarded by most people here.  If you're saying that people are discounting the fact that it would be better to get out of the market before it falls and then get back in at the bottom - I think everyone agrees.  However the point that I think most people are trying to make is that we have no idea when the right time to get out is and when the right time to get back in is.  As nereo's chart shows even the experts don't know and you and I know a lot less about what's coming than they do.  Check out the Top is In thread.  I quickly went through a few years of posts to find a couple of posts where people were worried about the markets on this forum in the past few years.  For reference, the S&P 500 is now at about 2600, give or take.  Here are a few with the S&P 500 value at the time (rough estimates - I didn't want to put in much work so I just moused-over an S&P 500 chart.  Should be close enough to get the point.):

October 2012 - S&P500 - 1400 https://forum.mrmoneymustache.com/investor-alley/investment-planning-for-the-'fiscal-cliff'/
January 2014 - S&P500 - 1800 https://forum.mrmoneymustache.com/investor-alley/market-top/
November 2016 - S&P500 - 2100 https://forum.mrmoneymustache.com/investor-alley/index-fund-'bubble'-about-to-burst/

Now that's not to say that I think everything's going to go up smoothly from here.  You might absolutely be correct, and there might be a minor, moderate, or huge drop tomorrow.  Or next week.  Or in April of 2019.  Or July 15th 2020 at 11:37 eastern time.  If we make enough guesses one of us will be right and will be able to say that market timing worked for me while everyone who picked a different day and missed out on the run-up or stayed in for the drop will stay silent.  But the markets go up 2 years out of every 3, so every time you pull your money out you're more likely to miss out on growth than you are to get out before a drop.  The drops are part of the ride - buck up and be thankful for the buying opportunity when it shows up. 

http://www.mrmoneymustache.com/2017/06/20/next-recession/

yes, but none of the dates you listed violated the long term MA for the bull rally we have been in, we now have. I would like to see the buy and holders here that held all the way thru 2008.

also, during those times; rates were still at zero or much lower than today and the FED  was adding money to the mkts and as I mentioned mortgage apps and car sales were not declining.

maybe all these things reverse in the next 3 months, but the fed monetary extraction schedule goes up to 60 billion  a motnh in a few days and is still scheduled to raise rates. you are free to keep fully allocated to stocks/indexes if you wish; I will not; sitting in cash  as have been doing in some of my portfolio since oct 9 has been a great move

i'll take moving average investing every day of the week and twice on sunday over buy and hold and i'll retire earler and have to save a lot less along the way.

sol

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #31 on: October 29, 2018, 09:04:24 PM »
I would like to see the buy and holders here that held all the way thru 2008.

Me!  I bought and held through all of 2008.  And every day since.

Quote
i'll take moving average investing every day of the week and twice on sunday over buy and hold and i'll retire earler and have to save a lot less along the way.

You can do whatever you want, but your strategy has historically not been a long term winner.

Cabaka

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #32 on: October 29, 2018, 09:10:58 PM »
I would like to see the buy and holders here that held all the way thru 2008.

Me!  I bought and held through all of 2008.  And every day since.

Quote
i'll take moving average investing every day of the week and twice on sunday over buy and hold and i'll retire earler and have to save a lot less along the way.

You can do whatever you want, but your strategy has historically not been a long term winner.

actually it has. if you go to cash under the moving average and then buy an index when it's over the MA; you outperform everything unless you bought something like amazon or apple shortly after their IPO.

I do not have a chart on me, but I've read murray rothbard and henry Hazlitt; so I got pretty good foundations.

sol

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #33 on: October 29, 2018, 09:46:55 PM »
actually it has. if you go to cash under the moving average and then buy an index when it's over the MA; you outperform everything unless you bought something like amazon or apple shortly after their IPO.

If you think you have a strategy that beats the index long term, net of taxes and transaction costs, you are about to be a billionaire.  Every bank on the planet will pay you to execute your strategy with billions and billions of dollars.  Go forth and be successful!  Come back and shower us little people with a little of your spare change after you cross the first billion dollars in profits.

Cabaka

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #34 on: October 30, 2018, 05:15:24 AM »
well, I'm going to dismiss the sarcasm; but i'll put some numbers up for you.

I estimate so far, I have saved around 50k in losses by going to cash on a percentage that I have and it will be around a 25k loss if it turns around and resumes the bull trend before I put that money back in a s+p index fund. certainly not going to make me a "billionaire" but I consider saving 25k pretty serious.

like you I also rode 2008 down before finding MA investing. if I could have limited my losses to 10 or 15% instead of the 48% drop and come back in 2009, I would not be a billionaire; but I would be retired or fire. yes, you will recover those loses, but you will not recover that time it took you to get back to even, it already will take me less time to be at even as I have reduced exposure.  it took 6 years to get back to even from the 2007 high buying and holding. if you had followed MA; it would have been much less and your gains would be higher now as you would have lost less of your principal.

you keep buying and holding and be as sarcastic as you wish.
« Last Edit: October 30, 2018, 05:29:40 AM by Cabaka »

nereo

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #35 on: October 30, 2018, 05:38:49 AM »

yes, but none of the dates you listed violated the long term MA for the bull rally we have been in, we now have. I would like to see the buy and holders here that held all the way thru 2008.

[raises hand] - me!  I've been buy and hold all this time.  I was buy and hold when I had my first 'real' job and lived in Silicon Valley during the dot-com bust.  I was buy and hold during all of the 2008 recession (was able to add to my biweekly contributions).  And I continued to buy and hold throughout this latest run-up.  My latest strategy?  Continue to buy and hold!

Vanguard published a white paper a few years back and revealed that a majority of its non-institutional investors are buy and hold types.

i'll take moving average investing every day of the week and twice on sunday over buy and hold and i'll retire earler and have to save a lot less along the way.

Good luck.  The history for people who think they've discovered a way to beat buy-and-hold is not kind to them.

DS

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #36 on: October 30, 2018, 07:17:30 AM »
HODL

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #37 on: October 30, 2018, 07:23:26 AM »
I would like to see the buy and holders here that held all the way thru 2008.

Me!  I bought and held through all of 2008.  And every day since.

Mw too!

I started investing by putting in a big lump sum early 2007.

wenchsenior

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #38 on: October 30, 2018, 07:37:36 AM »
I would like to see the buy and holders here that held all the way thru 2008.

Me!  I bought and held through all of 2008.  And every day since.

Mw too!

I started investing by putting in a big lump sum early 2007.

Same.  Started investing in 2000, and have bought every two weeks (and held) ever since.

magnet18

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #39 on: October 30, 2018, 07:56:30 AM »
well, I'm going to dismiss the sarcasm; but i'll put some numbers up for you.

I estimate so far, I have saved around 50k in losses by going to cash on a percentage that I have and it will be around a 25k loss if it turns around and resumes the bull trend before I put that money back in a s+p index fund. certainly not going to make me a "billionaire" but I consider saving 25k pretty serious.

like you I also rode 2008 down before finding MA investing. if I could have limited my losses to 10 or 15% instead of the 48% drop and come back in 2009, I would not be a billionaire; but I would be retired or fire. yes, you will recover those loses, but you will not recover that time it took you to get back to even, it already will take me less time to be at even as I have reduced exposure.  it took 6 years to get back to even from the 2007 high buying and holding. if you had followed MA; it would have been much less and your gains would be higher now as you would have lost less of your principal.

you keep buying and holding and be as sarcastic as you wish.

So you're beating the index long term with a simple moving average strategy?

It sounds like your strategy could be simply executed by a computer, so why don't you whip up a simulation and start it with $1000 at 1000 random points in history and show us how it beats the index every time.  Please post your results, I desperately want in on this strategy.

PizzaSteve

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #40 on: October 31, 2018, 05:51:16 PM »

yes, but none of the dates you listed violated the long term MA for the bull rally we have been in, we now have. I would like to see the buy and holders here that held all the way thru 2008.

[raises hand] - me!  I've been buy and hold all this time.  I was buy and hold when I had my first 'real' job and lived in Silicon Valley during the dot-com bust.  I was buy and hold during all of the 2008 recession (was able to add to my biweekly contributions).  And I continued to buy and hold throughout this latest run-up.  My latest strategy?  Continue to buy and hold!

Vanguard published a white paper a few years back and revealed that a majority of its non-institutional investors are buy and hold types.

i'll take moving average investing every day of the week and twice on sunday over buy and hold and i'll retire earler and have to save a lot less along the way.

Good luck.  The history for people who think they've discovered a way to beat buy-and-hold is not kind to them.
HODOR Strategy...😎 Picture "hold door" while chaos surrounds...
« Last Edit: October 31, 2018, 05:53:39 PM by PizzaSteve »

Villanelle

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #41 on: November 01, 2018, 02:08:31 AM »

in addition to the fed continuing to raise rates and extract money from the market, you now have mortgage applications and new and used cars sales declining and the prices of houses for sale in some markets starting to drop.

maybe motgage apps and car sales turn around but unlikely with raising rates and if that continues; a recession is likely to follow.

I still contribute regulary to my 401k but I switched some to bonds on oct 9, sure it'll come back eventually but meanwhile you lost that time to get it back there by riding it down, I just do not understand how that concept is discarded by most here.

I'm not sure I understand what concept you think is being discarded by most people here.  If you're saying that people are discounting the fact that it would be better to get out of the market before it falls and then get back in at the bottom - I think everyone agrees.  However the point that I think most people are trying to make is that we have no idea when the right time to get out is and when the right time to get back in is.  As nereo's chart shows even the experts don't know and you and I know a lot less about what's coming than they do.  Check out the Top is In thread.  I quickly went through a few years of posts to find a couple of posts where people were worried about the markets on this forum in the past few years.  For reference, the S&P 500 is now at about 2600, give or take.  Here are a few with the S&P 500 value at the time (rough estimates - I didn't want to put in much work so I just moused-over an S&P 500 chart.  Should be close enough to get the point.):

October 2012 - S&P500 - 1400 https://forum.mrmoneymustache.com/investor-alley/investment-planning-for-the-'fiscal-cliff'/
January 2014 - S&P500 - 1800 https://forum.mrmoneymustache.com/investor-alley/market-top/
November 2016 - S&P500 - 2100 https://forum.mrmoneymustache.com/investor-alley/index-fund-'bubble'-about-to-burst/

Now that's not to say that I think everything's going to go up smoothly from here.  You might absolutely be correct, and there might be a minor, moderate, or huge drop tomorrow.  Or next week.  Or in April of 2019.  Or July 15th 2020 at 11:37 eastern time.  If we make enough guesses one of us will be right and will be able to say that market timing worked for me while everyone who picked a different day and missed out on the run-up or stayed in for the drop will stay silent.  But the markets go up 2 years out of every 3, so every time you pull your money out you're more likely to miss out on growth than you are to get out before a drop.  The drops are part of the ride - buck up and be thankful for the buying opportunity when it shows up. 

http://www.mrmoneymustache.com/2017/06/20/next-recession/

yes, but none of the dates you listed violated the long term MA for the bull rally we have been in, we now have. I would like to see the buy and holders here that held all the way thru 2008.

also, during those times; rates were still at zero or much lower than today and the FED  was adding money to the mkts and as I mentioned mortgage apps and car sales were not declining.

maybe all these things reverse in the next 3 months, but the fed monetary extraction schedule goes up to 60 billion  a motnh in a few days and is still scheduled to raise rates. you are free to keep fully allocated to stocks/indexes if you wish; I will not; sitting in cash  as have been doing in some of my portfolio since oct 9 has been a great move

i'll take moving average investing every day of the week and twice on sunday over buy and hold and i'll retire earler and have to save a lot less along the way.

Me, too!  Been investing monthly since about 2002.  I don't even know--not even a rough guess--how much I lost on paper in 2008 because it made no difference to me. 

I definitely wish you luck in your strategy long term.  If you are happy with it, vaya con dios.  I'm happy with the piles and piles of statistics and research out there that say buy and hold a simple portfolio of low cost index funds is best.  But it take all kinds. 


MrOnyx

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #42 on: November 01, 2018, 04:30:36 AM »
Seriously, Cabaka, the collective sarcasm and discouragement you're finding here is not to shoot you down or humiliate you. The kind folks here are just pointing out one very serious, sensible point; that buying and holding index funds long term is the easiest and generally all-round best way to save up for FIRE.

The fact is that this strategy WORKS. It is tried and tested and it works. If you want to try and time the market, go right ahead, but don't say we didn't warn you when you get burned by your own arrogance a few years down the line.

sol is right - there are plenty of people that get paid millions per year to predict and analyse the market. If you're better than their degrees coupled with decades of experience and wisdom, then you must have superpowers. If you're the rain man of finance, then please enlighten us.

Personally, yes, I suspect we may have a recession within the next few years. Not because I've analysed anything, but because these things tend to happen in cycles and it has been quite a while now since the last one (and because of that sudden drop we had recently - that's not an encouraging sign.) However, I'm not going to pull out - I'm going to hold and keep investing. See, I could be wrong; we could be about to shoot up again. You cannot time the market, so don't try.
« Last Edit: November 01, 2018, 04:34:02 AM by MrOnyx »

DS

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #43 on: November 01, 2018, 07:41:08 AM »
HODOR Strategy...😎 Picture "hold door" while chaos surrounds...

Yes, travel through time and hijack someone's brain and shift the markets in your favor!

MrOnyx

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #44 on: November 01, 2018, 07:44:01 AM »
HODOR Strategy...😎 Picture "hold door" while chaos surrounds...

Yes, travel through time and hijack someone's brain and shift the markets in your favor!

I mean if time travel were possible, no brain hijacking would be required; we'd all go back and invest in Google, Microsoft, Apple or Bitcoin* just before they soared!

* and we'd know just when to sell, too...

nereo

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #45 on: November 01, 2018, 07:44:11 AM »
HODOR Strategy...😎 Picture "hold door" while chaos surrounds...

Yes, travel through time and hijack someone's brain and shift the markets in your favor!
Spoiler alert, dude!!

GuitarStv

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #46 on: November 01, 2018, 07:45:25 AM »
HODOR Strategy...😎 Picture "hold door" while chaos surrounds...

Yes, travel through time and hijack someone's brain and shift the markets in your favor!

I mean if time travel were possible, no brain hijacking would be required; we'd all go back and invest in Google, Microsoft, Apple or Bitcoin* just before they soared!

* and we'd know just when to sell, too...

It doesn't have to be required to be fun . . .

MrOnyx

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #47 on: November 01, 2018, 07:48:32 AM »
Oh, if that was a reference, I'm afraid it may have passed me by! Ignore me...!

nereo

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #48 on: November 01, 2018, 07:59:42 AM »
Oh, if that was a reference, I'm afraid it may have passed me by! Ignore me...!
Game of Thrones.

Maenad

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Re: I cant see the recession yet, pass me the glasses. Recession in 2 years?
« Reply #49 on: November 01, 2018, 08:11:01 AM »




I'm not the only one that noticed that the predictions (blue) were positive every single year, am I? That should be enough to demonstrate how little the experts can understand the global economy. And if they can't, we little people definitely can't.