Author Topic: Recession in 2 ish years?.scale and nature? (Read 5779 times)

bthewalls · « **on:** September 10, 2019, 06:41:17 AM »

Hi all
Let's face it, the economy has to correct after such a long growth cycle. Ray dalio also expects it and he has a fair knowledge.

For long term investors it's no big deal. But is it stupid to start investing large lump sums (dollar point) at the moment?

B

reeshau · « **Reply #1 on:** September 10, 2019, 06:51:54 AM »

What would be stupid is to wait for the certain recession is 2 years, and find that 4 years later, you were still sitting on cash while the world passed you by.

While I might wait until October 31 to see just what Brexit will do (if you are investing globally) even that is not certain: they could delay, Labour could win, and there could be a second referendum. There is always uncertainty, and in 10 or 20 years it won't matter. But you will have to sweat out each day you purposefully delay the action you seem to want to take.

The picture below has been shown elsewhere here before, but it illustrates the point so well it's worth re-posting.

ender · « **Reply #2 on:** September 10, 2019, 07:05:04 AM »

People have been saying this for about 5 years now.

Eventually they will be right.

Travis · « **Reply #3 on:** September 10, 2019, 07:07:30 AM »

Quote from: bthewalls on September 10, 2019, 06:41:17 AM

Hi all
Let's face it, the economy has to correct after such a long growth cycle. Ray dalio also expects it and he has a fair knowledge.

For long term investors it's no big deal. But is it stupid to start investing large lump sums (dollar point) at the moment?

B

The market had a correction Oct-Dec of last year of 20%. Some signs point to a recession up to two years from now. Or it won't happen until later. Or it might happen sooner. In the meantime you're counting sheep waiting for some arbitrary metric to get into the market.

"For long term investors it's no big deal."

Long term investors had to start somewhere. Join the club!

RWD · « **Reply #4 on:** September 10, 2019, 08:00:45 AM »

ender · « **Reply #5 on:** September 10, 2019, 08:05:38 AM »

Quote from: RWD on September 10, 2019, 08:00:45 AM

These threads are like clockwork.

The worst part is eventually someone will be right... and they won't see the litany of failure that led to them eventually getting lucky and instead think they somehow predicted it.

terran · « **Reply #6 on:** September 10, 2019, 08:09:44 AM »

Quote from: ender on September 10, 2019, 08:05:38 AM

Quote from: RWD on September 10, 2019, 08:00:45 AM
These threads are like clockwork.

The worst part is eventually someone will be right... and they won't see the litany of failure that led to them eventually getting lucky and instead think they somehow predicted it.

Even a broken clock is right twice a day, as they say.

Scandium · « **Reply #7 on:** September 10, 2019, 08:33:18 AM »

Quote from: bthewalls on September 10, 2019, 06:41:17 AM

Hi all
Let's face it, the economy has to correct after such a long growth cycle. Ray dalio also expects it and he has a fair knowledge.

For long term investors it's no big deal. But is it stupid to start investing large lump sums (dollar point) at the moment?

What's the deal with all the references here lately to this Dalio guy's dumb and forever wrong predictions? Are these his bots boosting his site or something? I don't see why else someone would be spread his nonsense ramblings..

ender · « **Reply #8 on:** September 10, 2019, 08:36:29 AM »

Quote from: Scandium on September 10, 2019, 08:33:18 AM

Quote from: bthewalls on September 10, 2019, 06:41:17 AM
Hi all
Let's face it, the economy has to correct after such a long growth cycle. Ray dalio also expects it and he has a fair knowledge.

For long term investors it's no big deal. But is it stupid to start investing large lump sums (dollar point) at the moment?

What's the deal with all the references here lately to this Dalio guy's dumb and forever wrong predictions? Are these his bots boosting his site or something? I don't see why else someone would be spread his nonsense ramblings..

https://forum.mrmoneymustache.com/investor-alley/top-is-in/

Davnasty · « **Reply #9 on:** September 10, 2019, 09:32:03 AM »

Quote from: ender on September 10, 2019, 08:05:38 AM

Quote from: RWD on September 10, 2019, 08:00:45 AM
These threads are like clockwork.

The worst part is eventually someone will be right... and they won't see the litany of failure that led to them eventually getting lucky and instead think they somehow predicted it.

And then 10 years later they'll be treated like the Oracle of recessions

SwordGuy · « **Reply #10 on:** September 10, 2019, 01:25:15 PM »

Quote from: ender on September 10, 2019, 07:05:04 AM

People have been saying this for about 5 years now.

Eventually they will be right.

I guess I'm precocious, I thought it would correct in 2012...

Buffaloski Boris · « **Reply #11 on:** September 10, 2019, 02:20:33 PM »

Quote from: bthewalls on September 10, 2019, 06:41:17 AM

For long term investors it's no big deal. But is it stupid to start investing large lump sums (dollar point) at the moment?

if you expect _____ market to drop greatly in the not too distant future then you’d be a fool to put your stash in that market before it happens.

However if you or I could actually predict the movements of _____ market with any certainty regarding time and magnitude, we wouldn’t be here. We’d be too busy shopping for our new ski chalet and yacht. No one has a reliable crystal ball. Or if they do, they’re keeping it quiet.

I think even JL Collins would agree with me on this: it isn’t the market ups and downs that will really kill your portfolio, it’s when you bail out at the bottom and aren’t there to ride the market back up. And here is the the really important part: if you are not completely persuaded that you’re on the right investment path, you will probably be one of those who bail on it at the wrong time.

Juan Ponce de León · « **Reply #12 on:** September 11, 2019, 12:50:13 AM »

I like to just set myself a preordained schedule of investments. Every quarter or every month, that you don't deviate from. Takes all the emotion out of it, you know you are buying X amount on the 15th October for example, no matter what. And you will keep investing, no matter what. A recession in 2 years could be a great thing, if you have a steady job and you have say a further 15 years of investments to make.

Montecarlo · « **Reply #13 on:** September 11, 2019, 04:43:23 AM »

Quote from: bthewalls on September 10, 2019, 06:41:17 AM

Hi all
Let's face it, the economy has to correct after such a long growth cycle. Ray dalio also expects it and he has a fair knowledge.

For long term investors it's no big deal. But is it stupid to start investing large lump sums (dollar point) at the moment?

B

I have seen zero credible evidence that the length of the expansion has anything to do with the likelihood of a recession.

Why then, you ask, aren’t there expansions of multiple decades? There are.

Think about it like rolling two dice. Snake eyes equals recession. If you keep rolling, eventually you’ll get a recession. There’s a pretty small chance you can roll 100 times in a row without getting snake eyes, but just because you get to 99 doesn’t increase your risk

kenaces · « **Reply #14 on:** September 11, 2019, 05:24:48 AM »

Quote from: bthewalls on September 10, 2019, 06:41:17 AM

Hi all
Let's face it, the economy has to correct after such a long growth cycle. Ray dalio also expects it and he has a fair knowledge.

For long term investors it's no big deal. But is it stupid to start investing large lump sums (dollar point) at the moment?

B

I am pretty sure Mr Dailio would tell you it is stupid not to invest and argue that you should have a well-diversified portfolio.

Linea_Norway · « **Reply #15 on:** September 11, 2019, 05:54:08 AM »

About having a lump sum... We will be selling our house this fall or winter and that will free up a lot of our FIRE stash for the next many years. We hope that the stock market will make a dive after we have received the money, because then we'll buy cheaply. Otherwise we will be careful of going into the stock market with more than we already have there (the new lump sum is more than 2 x what we have in stocks now).
With my leftover salary, I just buy a bunch of stocks every month, spreading risk.

bthewalls · « **Reply #16 on:** September 11, 2019, 02:42:13 PM »

Guys and gals thanks for all the insight.

PDXTabs · « **Reply #17 on:** September 12, 2019, 11:19:56 AM »

Quote from: bthewalls on September 10, 2019, 06:41:17 AM

Hi all
Let's face it, the economy has to correct after such a long growth cycle. Ray dalio also expects it and he has a fair knowledge.

That's what I was saying late 2016, and yet here we are.

Quote from: bthewalls on September 10, 2019, 06:41:17 AM

But is it stupid to start investing large lump sums (dollar point) at the moment?

No, dump it in and watch your dividend reinvestment compound.

As for the scale and duration of the next recession, who knows? The last one was the worst since WWII and the SP500 with dividends reinvested still recovered in 5.5 years (inflation adjusted). I personally am not concerned.

Duke03 · « **Reply #18 on:** September 12, 2019, 12:52:16 PM »

Australia hasn't had a recession in 27 years. I'm sure at some point they will have a doozy of one. On the flip side you have Japan and their lost decade. Just something to think about.

Metalcat · « **Reply #19 on:** September 12, 2019, 01:15:24 PM »

Quote from: bthewalls on September 10, 2019, 06:41:17 AM

Hi all
Let's face it, the economy has to correct after such a long growth cycle. Ray dalio also expects it and he has a fair knowledge.

For long term investors it's no big deal. But is it stupid to start investing large lump sums (dollar point) at the moment?

B

Is it possible that people investing lump sums right now might see significant reductions in net worth through a recession?

Yep. It's very possible.

Is it predictable in a meaningful way that should modify investment behaviour????
No

The markets will do what the markets will do.
All of those people who lost money trying to market time in the past weren't fundamentally dumber than you are.
They had just as many indicators and articles written by brilliant people telling them that *this time* the rationale for market timing makes sense.

Could this time be different?
Yeah, sure, it really might be.

Do a lot of people stand to lose a lot by investing/staying in the market right now despite the warnings? Sure, maybe.

Is there any reliable way to tell???
Oh fuck no!!!
Absolutely not!!!

So you can either look at history and rationally base your behaviour on that, or you can follow your gut and decide that this time is in fact different for some reason.
You might win, but history and math say you will probably lose.

What you choose to do will depend on how much of a gambler you are, but make no mistake, market timing is gambling.

never give up · « **Reply #20 on:** September 12, 2019, 01:34:41 PM »

Hi bthewalls. This is the third thread you have created asking something similar. I don’t bring that up to be negative but I think if you are looking for the one perfect answer to help guide you going forwards, then as helpful as everyone is on these forums, I don’t think you are going to get that perfect answer. It will be a decision you need to make yourself.

I believe from one of your other threads you have recently sold a house and so have a substantial lump sum to invest. I appreciate that is a bit scary given the run the stock market has been on over the last few years, albeit with numerous corrections along the way.

There were some good links added on one of the other threads. I know I linked you to a Monevator article on asset allocation. There are also many threads on lump sum versus drip feeding etc.

If you are nervous then a broad asset allocation and regular buying would be the way to go in the most tax efficient way possible. This all has to be judged within the context of your expenses, how far you are from FIRE, income streams, objectives etc.

If you need more specific advice a full case study may be the way to go.

I wish you all the best in putting a plan together.

bthewalls · « **Reply #21 on:** September 13, 2019, 05:42:10 AM »

Hell yes I'm shit scared....and rightly so lol. Lump sum and need ten years of 'relatively normal' condition to FIRE...or that only asset allocation open to me is near 100% equity based on min. 5 percent return on average. 5 percent should be very conservative and safe assumption....

I love optimism but am plagued by realism...trying to learn..

Thanks for all advice...forum is great resource for learning

Barry

Metalcat · « **Reply #22 on:** September 13, 2019, 08:32:19 AM »

Quote from: bthewalls on September 13, 2019, 05:42:10 AM

Hell yes I'm shit scared....and rightly so lol. Lump sum and need ten years of 'relatively normal' condition to FIRE...or that only asset allocation open to me is near 100% equity based on min. 5 percent return on average. 5 percent should be very conservative and safe assumption....

I love optimism but am plagued by realism...trying to learn..

Thanks for all advice...forum is great resource for learning

Barry

You aren't plagued by realism, you are stressed because your definition of success depends on conditions involving variables you cannot control.

Plans are not meant to predict the future, they are meant as guidelines for our behaviour today. No matter how much math you do, no matter how many simulations you run, and no matter how many models you try, you cannot predict what will happen in ten years.
Sorry, you can't.

What you can do is control your expenses and savings today to a level where you feel comfortable with the likely outcome and have accounted for the risk of worse outcomes.

All you can control is what you choose to do today, and that is the ONLY, SINGULAR, REALISTIC purpose of having a plan.

Once you accept that plans are inspired by, but have virtually no connection to the actual future, you can accept that not being able to control it is actually a good thing, because it means that there are possibilities that might even be better.

reeshau · « **Reply #23 on:** September 13, 2019, 09:42:18 AM »

Quote from: Malkynn on September 13, 2019, 08:32:19 AM

Once you accept that plans are inspired by, but have virtually no connection to the actual future, you can accept that not being able to control it is actually a good thing, because it means that there are possibilities that might even be better.

"Plans are worthless, but planning is everything." - Dwight D. Eisenhower

And, even more relevant to Malkynn's points, is some of the elaboration following one time Ike said this:

"There is a very great distinction because when you are planning for an emergency you must start with this one thing: the very definition of 'emergency' is that it is unexpected, therefore it is not going to happen the way you are planning."

bthewalls · « **Reply #24 on:** September 14, 2019, 12:05:03 PM »

Thanks guys..so true

nsmall · « **Reply #25 on:** September 15, 2019, 11:03:28 PM »

I was in a similar situation, changed my asset allocation, invested 80k slowly (2 months), kept 80k to the side, and now I sleep like a baby.

You were given some awesome advice. We work hard for what we have so it is a big deal and we want to make the best decision, but we honestly have no idea about the future so just adjust your asset allocation to something that doesn't stress you out.

bthewalls · « **Reply #26 on:** September 16, 2019, 12:42:11 AM »

I'll dollar point in slowly.

I enjoy the study of market aspect. I'm curious if the report slow down caused by the trade war will actually cool down an over heated/leveraged market? In theory it could reduce bubble a bit.

B

Kl285528 · « **Reply #27 on:** September 16, 2019, 06:13:00 AM »

I always take comfort in this tale....

https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/

bthewalls · « **Reply #28 on:** September 16, 2019, 09:05:54 AM »

Kl285528 that's actually a very interesting tale. Quite reassuring too.

I'm a tad cursed with the need to have statistically significant cause/effect relationships between multiple variables....and they are hard to define in global macro economics and recessions. Lol

Surprised that software/algorithms haven't been developed to handle the more obvious market variables?

use2betrix · « **Reply #29 on:** September 16, 2019, 09:47:19 AM »

Quote from: Dabnasty on September 10, 2019, 09:32:03 AM

Quote from: ender on September 10, 2019, 08:05:38 AM
Quote from: RWD on September 10, 2019, 08:00:45 AM
These threads are like clockwork.

The worst part is eventually someone will be right... and they won't see the litany of failure that led to them eventually getting lucky and instead think they somehow predicted it.

And then 10 years later they'll be treated like the Oracle of recessions

Yep.. I can see articles in 2030... “See what the person who predicted the 2021 recession on the MMM forum has to say about the recession.”

ysette9 · « **Reply #30 on:** September 16, 2019, 10:04:49 AM »

Quote from: bthewalls on September 13, 2019, 05:42:10 AM

Hell yes I'm shit scared....and rightly so lol. Lump sum and need ten years of 'relatively normal' condition to FIRE...or that only asset allocation open to me is near 100% equity based on min. 5 percent return on average. 5 percent should be very conservative and safe assumption....

I love optimism but am plagued by realism...trying to learn..

Thanks for all advice...forum is great resource for learning

Barry

Please note also that all of these threads claiming the sky is falling and the market is overvalued and due to dump are generally talking about the US stock market. An easy way to allay these fears, real or imagined, is to put a good chunk in international. We have our stocks in 60% US/40% international but good arguments are made for 50/50 as well. Then you further dilute the US stock by having some US bonds and international bonds in your portfolio. Suddenly if doom does strike the US stock market it doesn’t have such a big impact on your bottom line, if that is what it takes to keep you sleeping well at night.

Linea_Norway · « **Reply #31 on:** September 16, 2019, 10:35:07 PM »

A financial magasine that I get wrote an artical about what is going to happen in the long run when a country or region has 0% interest and pressing new money for many years. This happened to Japan which stagnated economically. This is what that article thinks could happen in for example Europe.
Governments can do a few things to help their economy: building public stuff (roads, railroads, government buildings, schools, etc). Or they can lower taxes. But how long will they have the economy to do so? The conclusion was that we could perhaps expect a period of several decades with economic stagnation.
I personally think that AI could be a major joker here.

xander · « **Reply #32 on:** September 17, 2019, 03:18:07 AM »

I am in a similar situation. I foolishly pulled out of the markets and am sitting on a bunch of cash. It wasn't until I really started reading these forums and absorbing the info that I realized I was unknowingly trying to market time (oops).

Now I'm just trying to get over the psychological hump and buy back in with my taxable Vanguard account and my 401k. I have read the story of the "World's worst market timer" and that has given me a little comfort.

I'm 31 with 200k between both accounts. It's money I don't need in 10+ years...why haven't I pulled the trigger yet? :/

Linea_Norway · « **Reply #33 on:** September 17, 2019, 03:48:26 AM »

Quote from: xander on September 17, 2019, 03:18:07 AM

I am in a similar situation. I foolishly pulled out of the markets and am sitting on a bunch of cash. It wasn't until I really started reading these forums and absorbing the info that I realized I was unknowingly trying to market time (oops).

Now I'm just trying to get over the psychological hump and buy back in with my taxable Vanguard account and my 401k. I have read the story of the "World's worst market timer" and that has given me a little comfort.

I'm 31 with 200k between both accounts. It's money I don't need in 10+ years...why haven't I pulled the trigger yet? :/

Something in between could be to spread it over the year, putting in 10% every month or so.

bthewalls · « **Reply #34 on:** September 18, 2019, 03:54:50 AM »

xander I feel your pain! lol.

my understanding is that people at our stage of 'finanical development' lol take time to acquire the knowledge in the investment process. I find that I have to research a topic to death until it clicks and I trust it. Must say the help on this forum is great and short circuits the process. knowledge is power!

Do you think you'll dollar point in now, in the comfort that the trade war has reduced scale of the next normally occuring market correction. I still have 2008 scars......I reckon the last recession cost me about 1m overall.

xander · « **Reply #35 on:** September 18, 2019, 04:14:58 AM »

Quote from: bthewalls on September 18, 2019, 03:54:50 AM

xander I feel your pain! lol.

my understanding is that people at our stage of 'finanical development' lol take time to acquire the knowledge in the investment process. I find that I have to research a topic to death until it clicks and I trust it. Must say the help on this forum is great and short circuits the process. knowledge is power!

Do you think you'll dollar point in now, in the comfort that the trade war has reduced scale of the next normally occuring market correction. I still have 2008 scars......I reckon the last recession cost me about 1m overall.

It has been occupying a lot of my mind space recently to say the least lol. To be honest I think I see my self dumping it all back in at once, though with an asset allocation that is truly more in line with what I am comfortable with. I think it has actually "clicked" with me and I see now with more clarity that when/if the a recession or crash occurs...deep breath... my net worth might in fact be cut in half. I just need to to accept that although painful, it's part of it. I just cannot ever ever sell. Keep buying no matter what and I'll be golden.

I think I might get DONT SELL tattoo'd on my knuckles lol.

Cheers bthewalls, we will get through it!

h82goslw · « **Reply #36 on:** September 18, 2019, 09:01:40 AM »

Lump sum beats DCA......read this:

https://ofdollarsanddata.com/the-cost-of-waiting/amp/?__twitter_impression=true

and if you want to read more go to bogleheads.org

News:

Author Topic: Recession in 2 ish years?.scale and nature? (Read 5779 times)