04-02-2019, 09:29 AM
(04-02-2019, 06:39 AM)fenders53 Wrote:(04-02-2019, 01:35 AM)thomasc Wrote: It's the million dollar question isn't it? When will the next recession hit. I don't think anybody knows how long the debt fueled growth will last. I think the sentiment is that the current growth can't last forever. If that is the case at a certain point people/businesses won't be able to borrow more and something will have to give. Is it just me or did the government just put a band aid on the 2008 sub prime crash through quantitative easing and we are now heading for something even worse?
That's exactly what happened. And 2019 is proving if you over-react, you may miss a big run. This market timing thing is sure tough.
Not sure I'd call SPY below its 2018 highs a big run. It's certainly an impressive and fast V-shaped recovery from the December downturn, which just serves to remind how fast fortunes can change.
Absent a black-swan event, which isn't worth predicting (as, by definition, they can't be predicted), I don't see anything on the horizon that would presage a 2001 or 2008-style collapse in tech, finance, real-estate, etc. That said, the market still looks pricey heading into declining earnings/GDP, at historically full levels of employment (which are typically reached late-cycle, just prior to a recession), with an inverted 3mo/10yr yield curve. I suspect a more garden-variety business-cycle recession is in store, which would be a nice change from the last two burst bubbles if it pans out. My best guess, based on the recent yield-curve inversion is recession on or before 1Q-2Q 2020, with the actual data supporting a formal recognition/announcement of recession a quarter after that.
All of my 401K stuff is currently in ultrashort bond funds. There's no way the remainder of this business cycle comes anywhere close to duplicating the multi-bagger returns of the past decade. I'm okay missing out on the last gasp of a blowoff top, if that's what is in store. Frankly, I don't think a late-90s repeat is likely, as the global economic environment seems a lot shakier at the moment than back then. Maybe the S&P struggles upwards to ~3,000 before giving up ~30%. I'm okay with missing out on that in my 401K, which is limited to funds.
The DGI stuff in taxable accounts can just sit there and keep generating income. I'll buy more when they go on sale again.