I cant see the recession yet, pass me the glasses. Recession in 2 years?

[pecunia]

Not all of them:

Oil price changes happen quick.

Retail sales - a month lag maybe?

Unemployment - could be a lag there.  All of those GM layoffs haven't hit yet.

I guess I'll just have to wait and see.  The market crept up yesterday.

[waltworks]

Again, you can't use any of those indicators to predict a recession. You can see that they go down (or up in the case of unemployment) *after* a recession starts, but they aren't useful for prediction. Basically nothing is (inverted yield curve folks will make a case for that, but I'm not totally convinced). So we could be in a recession right now, or we could be 5 years from one - no way to know. There is no point trying to make investing decisions based on, say, oil prices.

-W

[nereo]

Some recent data regarding crude oil prices (blue line) and recessions (grey bars).
synopsis: there's little predictive power in either absolute oil price or direction on recessions.

[Davnasty]

Snide, bordering on sarcasm, with a touch of arrogance. Classy.

I'll try one: The internets don't forget. Hopefully you put some of your 401k money back in the market and didn't miss out on the 50% run up in the last 3 years while waiting for the big correction.

Right now my 401k is 100% sitting in cash waiting for a big correction. I don't call that market timing. I'm calling it oh crap there's a bunch of dark clouds and I'm hiding in my house sleeping soundly under my blanket to the tune of that hard rain outside. I might even watch some cool Netflix movies while waiting for the storm to pass... Learn, educate yourself, deploy your capital efficiently. Beating the market is easier than you think. Pssh what is that, like 7%? C'mon

Yup still hiding in cash/money market. But you brought up an entirely irrelevant point to the topic at hand...to prove a point of what exactly?

"my 401k is 100% sitting in cash waiting for [the right time]."

If someone asked me what market timing is, this is the example I would give them. If this is what you think you should be doing, I'm not going to argue with you, but in your case you just need to own it.

If you still can't admit it, can you tell us what you think market timing is?

[pecunia]

Do stock prices necessarily fall in a recession?  Of all the indicators, I saw in the definition, none of them directly say stock prices will fall.  Do they always lag the onset of the recession?  It's kinda like - "Hey guys.  We're in the recession now.  Sell your stock, take your gains and watch the share price drop."

[waltworks]

Do stock prices necessarily fall in a recession?  Of all the indicators, I saw in the definition, none of them directly say stock prices will fall.  Do they always lag the onset of the recession?  It's kinda like - "Hey guys.  We're in the recession now.  Sell your stock, take your gains and watch the share price drop."

Generally, yes. Earnings go down, profits go down, companies go under, etc. The stock market doesn't have to follow the general economy as there's a huge amount of randomness inherent, but if you've got an actual bona-fide recession, I'd expect stocks to decline.

Again, though, not actionable information in any way.

-W

[Cabaka]

what evidence do you have that using a MA strategy will reliably beat the market?

None, because historically it hasn't beaten the market.  Not long term, net of costs.

see below.

now, I am not a professional with decades of experience like the company that posted this but I can certainly reduce portfoilios when the 50 crosses the 100 and then crosses the 200 as it has with the economic environment(rising rates, QT, declining mortgage apps, house prices and car sales, global markets declining) looks worse for the immediate future than better.

HOWEVER, IT IS NOT MY PLACE HERE TO ARGUE THE MERITS OF MA AND I AM NOT GOING TO DO THAT. I keep a calculation of the capital I have saved and that's enough of a winning argument to satisfy myself.

as you can see I have been here 18 months and have made 19 posts, so i'm not going to go back and forth.

what I am here to do is watch you all.

if this turns into a bear market, i'm going to watch who stays in and who bails as so many of you live on mmm and know what the mkt is doing and are largely buy and holders. I am told everyone is buy and hold until a point, will be interesting to see what that point is for the majority here(mine was the 50 crossing the 200) if the correction becomes serious like over 25%, I imagine at some point many will sell; will be interesting to see what that point is.

[waltworks]

Um, with that amount of garbled grammar and poor spelling, not to mention the random ALL CAPS, you're not going to convince anyone. Proofread, son.

Also, 3% WR requires a cool $5 million bucks?!?! WTF? That's $150k a year!

Nice graph, though. Nothing like hindsight. Too bad I don't have a Delorean.

-W

[nereo]

what evidence do you have that using a MA strategy will reliably beat the market?

None, because historically it hasn't beaten the market.  Not long term, net of costs.

see below. [snip]

If it's not painfully obvious to others joining in this conversation why the graph @Cabaka posted is complete BS, take a close look at the recessionary periods.  The portfolio holds with no losses.  The clear implication isn't that you buy only when the moving average is favorable, but that you sell everything and hold cash, jumping back in at the start of each post-recession run-up.  During the 2001 and 'great recession' the portfolio lost no value.

Got that, everyone?  The 'secret' here is to sell everything before the market goes down, and then buy right before it runs back up.  Simple!

[waltworks]

If it's not painfully obvious to others joining in this conversation why the graph @Cabaka posted is complete BS, take a close look at the recessionary periods.  The portfolio holds with no losses.  The clear implication isn't that you buy only when the moving average is favorable, but that you sell everything and hold cash, jumping back in at the start of each post-recession run-up.  During the 2001 and 'great recession' the portfolio lost no value.

Got that, everyone?  The 'secret' here is to sell everything before the market goes down, and then buy right before it runs back up.  Simple!

Nuh-uh! That's the *conservative* wimpy version. If you *short* the market every time it drops, you do WAY better. Cabaka's method is for suckers.

With my proven system, you can retire on millions of dollars a year, with almost no effort. Send $50 for my newsletter.

-W

[Blueberries]

Do stock prices necessarily fall in a recession?  Of all the indicators, I saw in the definition, none of them directly say stock prices will fall.  Do they always lag the onset of the recession?  It's kinda like - "Hey guys.  We're in the recession now.  Sell your stock, take your gains and watch the share price drop."

Most stock prices will fall in a recession. The market is typically a leading indicator and will top prior to a recession.

[slow hand slow plan]

That graph is the best!!  : )

Perfect market timing , super low safe withdraw amount, huge yearly spending, it ticks every crazy box and belongs in the forum section of mustachian wall of shame.

That is GOLD

[MrOnyx]

^ +1

Slow hand slow plan, I think Cabaka deserves a slow clap.

[appleshampooid]

Somewhat is Cabaka's defense, I think the blue/red stuff is measuring their "indicators" of moving averages blah blah, not the actual market prices. In no way am I endorsing this strategy, or this chart as accurate, but I'm not sure how much lead time the moving average crap gives you on recessions?

Just needs a couple more charts to fully debunk, I'm sure.

[sol]

Somewhat is Cabaka's defense, I think the blue/red stuff is measuring their "indicators" of moving averages blah blah, not the actual market prices.

Moving average "investing" is just another name for momentum "investing".  We've had multiple momentum threads of various flavors on this forum, including at least one that is still being actively followed as of yesterday.  Just read through the Investor Alley subforum for a good laugh.  Most of those strategies have been substantially more complicated than the simple version cabaka has promoted, focusing on rotating your investments between more than just stocks and cash based on recent performance, and we've even devoted a few tens of thousands of words to choosing the right look-back period and representative funds for "stocks" or "cash".  So far, none of them have outperformed the index over the duration they've been tracked, though several have been abandoned as being obvious losers and at least one promoter has permanently left the forum in disgrace.

Given this history, the fact that anyone would have the balls to show up here and claim they can beat the market with a momentum strategy is king of amazing.  That person is either woefully ignorant of the amount time and expertise that we've already devoted to this topic, or is just trolling for lulz.

I feel the same way when someone shows up and posts an "amazing new analysis" by someone like Kitces.  Um, the people on this forum have collectively done a much more thorough job of exploring these options than he has.  For some reason, people think a single individual like that has more authority than the collected wisdom of all the people here, because they found it on a pretty blog page and didn't bother to dig into the actual data.

I know that we sometimes come off as flippant and dismissive to newcomers with dumb ideas.  There's a reason for that, though.  The amount of expertise applied by this forum, both financial and technical and computational and theoretical, far outweighs anything any single person can offer you.  That expertise is largely invisible to newcomers, though, so they tend to think we're a bunch of loony amateurs.

[nereo]

I feel the same way when someone shows up and posts an "amazing new analysis" by someone like Kitces.  Um, the people on this forum have collectively done a much more thorough job of exploring these options than he has.  For some reason, people think a single individual like that has more authority than the collected wisdom of all the people here, because they found it on a pretty blog page and didn't bother to dig into the actual data.

I know that we sometimes come off as flippant and dismissive to newcomers with dumb ideas.  There's a reason for that, though.  The amount of expertise applied by this forum, both financial and technical and computational and theoretical, far outweighs anything any single person can offer you.  That expertise is largely invisible to newcomers, though, so they tend to think we're a bunch of loony amateurs.

Well @sol if you'd just finish creating your own blog then posters could bring THAT to the forum as some amazing new financial wisdom no one has ever thought of before.
:-P