Full of crap or correct?

[detroital]

https://www.youtube.com/watch?v=jYbIXFBxHC0

[soccerluvof4]

He always says a recession is coming. Like saying your going to die, eventually you will be right.  Bottom line should be prepared best you can for what might be around the corner.  To many people on both sides of the aisle make $ by trying to scare people.

[sisto]

If you are in the accumulation phase a recession is not a necessarily bad thing. I've actually been hoping one would hit before I FIRE, so I would have time to buy low and recover reducing my risk. Now I'm getting much closer and the thought of a recession sounds scary. I'm prepared though, I've made it through the rest of them and didn't change my asset allocation and will continue the journey/stay the course.

[marty998]

If you are in the accumulation phase a recession is not a necessarily bad thing. I've actually been hoping one would hit before I FIRE, so I would have time to buy low and recover reducing my risk. Now I'm getting much closer and the thought of a recession sounds scary. I'm prepared though, I've made it through the rest of them and didn't change my asset allocation and will continue the journey/stay the course.

The problem is you need to be really cashed up to take advantage of it. And you need to hang onto your job.

Example. Your stash is $500,000. You are currently adding $3000 per month to it.

Market falls 50% and takes 3 years to recover. You're adding $3000 a month to a $250k stash now, only if you still have a job.... it's not like you are really winning here. When the market recovers, you might have made say an extra $50k on the $108,000 you've invested over those 3 years, but that + the recovery on the stash still results in less than what you'd make if the market kept ticking along at 7% on your (now gone) $500k balance.

The only way to win is if you had $250k sitting on the sidelines waiting for this crash, in which case we'd call you out for trying to time the market and not being invested now, because you can't predict when the crash will occur, and as we've seen the market keeps moving up in the meantime (see "top in in" thread).

Be careful what you wish for.

[Davnasty]

If you are in the accumulation phase a recession is not a necessarily bad thing. I've actually been hoping one would hit before I FIRE, so I would have time to buy low and recover reducing my risk. Now I'm getting much closer and the thought of a recession sounds scary. I'm prepared though, I've made it through the rest of them and didn't change my asset allocation and will continue the journey/stay the course.

The problem is you need to be really cashed up to take advantage of it. And you need to hang onto your job.

Example. Your stash is $500,000. You are currently adding $3000 per month to it.

Market falls 50% and takes 3 years to recover. You're adding $3000 a month to a $250k stash now, only if you still have a job.... it's not like you are really winning here. When the market recovers, you might have made say an extra $50k on the $108,000 you've invested over those 3 years, but that + the recovery on the stash still results in less than what you'd make if the market kept ticking along at 7% on your (now gone) $500k balance.

The only way to win is if you had $250k sitting on the sidelines waiting for this crash, in which case we'd call you out for trying to time the market and not being invested now, because you can't predict when the crash will occur, and as we've seen the market keeps moving up in the meantime (see "top in in" thread).

Be careful what you wish for.

I think the assumption is that there will be a downturn at some point, better it happens while working than right after you quit.

[sisto]

If you are in the accumulation phase a recession is not a necessarily bad thing. I've actually been hoping one would hit before I FIRE, so I would have time to buy low and recover reducing my risk. Now I'm getting much closer and the thought of a recession sounds scary. I'm prepared though, I've made it through the rest of them and didn't change my asset allocation and will continue the journey/stay the course.

The problem is you need to be really cashed up to take advantage of it. And you need to hang onto your job.

Example. Your stash is $500,000. You are currently adding $3000 per month to it.

Market falls 50% and takes 3 years to recover. You're adding $3000 a month to a $250k stash now, only if you still have a job.... it's not like you are really winning here. When the market recovers, you might have made say an extra $50k on the $108,000 you've invested over those 3 years, but that + the recovery on the stash still results in less than what you'd make if the market kept ticking along at 7% on your (now gone) $500k balance.

The only way to win is if you had $250k sitting on the sidelines waiting for this crash, in which case we'd call you out for trying to time the market and not being invested now, because you can't predict when the crash will occur, and as we've seen the market keeps moving up in the meantime (see "top in in" thread).

Be careful what you wish for.

@marty998 Of course a steady 7% would be better, but that's not typically how the market works. A downturn will happen and you can't try to time the market. You have to just be willing to stick it out and not make changes to your asset allocation. Of course I'm also assuming that I've held my job during the downturn which fortunately I have. I do, however, also have an emergency stash in cash and CDs to cover expenses for 8 months too. At Mega Corp we seem to have layoffs on a yearly cadence with major ones every 2-4 years. The point is I follow my plan. I have actually watched my 401K drop by 50% and yes the recovery took about 2-3 years, but I also gained a number of new shares too and was also still buying ESPP shares in Mega Corp. So about year 3 or 4 I was way ahead. I didn't track things the way I do now, I wish I had.

@Dabnasty Yes, that was my point.