Next Recission ?

[thomasc]

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?

[fenders53]

(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. 

[Otter]

(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.

[fenders53]

It's been a big run if you pulled out of equities in late DEC and missed out on a 20% rise, which a lot of people did based on mutual fund outflows. Half of them should be getting back in by summer Like you said Otter, we have to be closer to the end than the beginning of this cycle.

We all know a beating is coming at some point in the next few years. (at least we think we know anyway). I know I won't get it perfect, but I am determined to not take a bludgeoning a few years before I retire for real. I wish I had went 100% equities late DEC, but I didn't and it's too late to do what I wish I'd done then(IMO it's too late anyway). Since it isn't taxable I look for opportunities to peel off a little profit here and there, and put it in the ultra-short bond fund like Otter. It;s starting to pile up and I sleep better. I'll feel a whole lot better about my port taking the inevitable flogging if I can shop for beat down stocks every month with some real money. That is how you get amazing returns, but it requires a bit of luck unfortunately.

I am NOT going to ride out a crash with 100% of my port in stocks at the top. Been there, done that, it really sucks, and it's avoidable. Even if you are 25yrs old it's nice to buy some on the bottom. 100% invested just because you are young is bad advice. All that said, a series of years similar to 2018 is not out of the question. We could be +/- 5% annually for years. With all the electronic trading now it sure seems like even those kind of years are going to include so pretty significant volatility we can take advantage of. I am going to guess DEC 18 becomes normal as some of these companies hit stagnant or even slightly declining earnings. I on;t rule out the possibility of a US infrastructure package. Maybe that could pass a vote in the US? Nobody wants to be directly linked to the the cause of crashing this economy before an election.

[rayray]

Good read guys!

Being in the market is a tough one, then again, not being in the market is a devastating one.

Being in the market is the only way I can accomplish what my goals are since I don't make an extremely high salary, I wouldn't even classify it as a high salary! I've had friends tell me the market has been overpriced since 2013--those same friends are still telling me the same thing--one day they're going to be right. I build up cash reserves then buy what I think is a good buy at the moment--usually something I already own. For the mutual funds in my portfolio I usually buy some shares after they distribute dividends and or short/long term gains--been doing it for years and seems to work out a-ok. I don't plan on selling or prepping for any downturn or recession--my biggest buys were this past fall and as fenders has said sometimes it's luck and buying in December then a big 2019 run-up was just damn pure luck on my part. I invest as I just mentioned a few sentences before and keep going, nothing changes, then when there is 10% downturn I put 5% cash to work, 20% I put 10% cash to work ect etc etc at 40% I'm almost cashless.

I don't have any fancy degrees, no crazy salary, a mortgage that is higher then I'd like but makes my wife extremely happy and no car payments even though I really need a pickup lol. On paper I'm a millionaire, factor in our what I consider a high mortgage we're still paper millionaires, just count what we have in the market and you can take a guess, it's still seven figures. During the next market down turn and or recession we won't be in that sphere, I'm sure, but I'll buy and reinvest and the good times will come back--if they don't? Then we have bigger problems to worry about then money.

And yes...I am probably the cheapest person you can ever meet--my biggest luxury is a straight-edged razor shave.

When it comes to investing I'm a tortoise, if you see me walking slowly in a direction don't make me go in another direction! lol...it'll mess up my future egg nest!

[thomasc]

I have a feeling that this bubble still has a few years left. Look at what has happened in Japan. Recent headline:

'The Bank of Japan Is Now A Top-10 Shareholder In 50% Of All Japanese Companies'

I have read somewhere that the US is now getting ready for QE4.

[fenders53]

(04-06-2019, 02:27 PM)rayray Wrote: Good read guys!

Being in the market is a tough one, then again, not being in the market is a devastating one.

Being in the market is the only way I can accomplish what my goals are since I don't make an extremely high salary, I wouldn't even classify it as a high salary! I've had friends tell me the market has been overpriced since 2013--those same friends are still telling me the same thing--one day they're going to be right. I build up cash reserves then buy what I think is a good buy at the moment--usually something I already own. For the mutual funds in my portfolio I usually buy some shares after they distribute dividends and or short/long term gains--been doing it for years and seems to work out a-ok. I don't plan on selling or prepping for any downturn or recession--my biggest buys were this past fall and as fenders has said sometimes it's luck and buying in December then a big 2019 run-up was just damn pure luck on my part. I invest as I just mentioned a few sentences before and keep going, nothing changes, then when there is 10% downturn I put 5% cash to work, 20% I put 10% cash to work ect etc etc at 40% I'm almost cashless.

I don't have any fancy degrees, no crazy salary, a mortgage that is higher then I'd like but makes my wife extremely happy and no car payments even though I really need a pickup lol. On paper I'm a millionaire, factor in our what I consider a high mortgage we're still paper millionaires, just count what we have in the market and you can take a guess, it's still seven figures. During the next market down turn and or recession we won't be in that sphere, I'm sure, but I'll buy and reinvest and the good times will come back--if they don't? Then we have bigger problems to worry about then money.

And yes...I am probably the cheapest person you can ever meet--my biggest luxury is a straight-edged razor shave.

When it comes to investing I'm a tortoise, if you see me walking slowly in a direction don't make me go in another direction! lol...it'll mess up my future egg nest!

rayray

We may debate a lot, but we don't disagree so much in reality.  I lived my investment life about the same as you did,  It sounds like we are in a very similar financial situation minus the house.   Getting debt free by age 50 was key to my plan.  I accomplished that.  I was 95-100% investment through the tech crash and the financial crisis.  That's not going to happen to me again.  It's a wonder I kept the faith in the stock market after the tech bubble.  And I agree with Thomas, this thing could run for years, but not at this pace.  I don't even think we are in a bubble at the moment, but the good stocks are over-valued almost without exception.  I don't think I will ever stop preaching that one must always have some cash, and adjust it for where we appear to be in the cycle.  Whether it is $10,000 or $200,000 laying around, you'll be VERY happy when you can invest it in some stocks that are 50% off.  Going completely in or out of the market, that is where you will come up WAY short over time.

[rayray]

Fenders,

Absolutely agree with what you wrote. I started investing in and around the tech boom, well, a little before 1997/1998--my first investments was a kplan, opened a roth in 98 (I believe that was the year they came available due to Senator Roth?), an Exxon (b4Mobil) drip plan, and a I think an Ameritrade account for Paychex and some Janus Funds. At the time I thought it was amazing that I received dividends! Couldn't believe those first deposits! Sold Exxon and Paychex as a down payment on a fixer upper--good learning experience but I should have rented and enjoyed myself more because a fixer upper is a lot of endless work. Plus, keeping Exxon and Paychex would have been a better move, imho...Hindsight is truly 20/20. Then again, it did teach me valuable life lessons. The tech boom/bust destroyed whatever I had particularly my Janus funds--I panicked and sold locking in my losses creating an "x" amount of tax write offs. Paychex and Exxon was gone because I bought the house and my Kplan had so little there was nothing to do--when I think about it probably wasn't even 10k dollars that disappeared. Then again would you flush 10k in the toilet, right now? NO LOL. Built up my investments nicely between Vanguard (Roth), my kplan and one individual stock--Markel. Then the real estate bust happened, knew something wasn't right when bartenders I knew started selling real estate and were making crazy money...My golfing buddies and I would look at each other and say something is off in the world? It's like wait a minute? Bartenders and Barbers are supposed to have bookmaking and shylocking as a side business, or maybe, cutting hair or serving alcohol as the side business depending how one looks at it lol...not selling real estate!! Of course as the real estate bust happened I was hit with cancer and was on my deathbed--friends would call me and tell me to sell! SELL! It's NEVER COMING BACK!! Friends that had finance degrees, friends in the financial business--I told them what's the point, I'm sick, I'm just trying to live...I never looked at my investments--When I did look it went from 212 maybe 214k tops to 104K total....79k was in the kplan the rest in the Roth and Markel stock. The helping factor was even though I was sick, the kplan deductions were never changed and I was still buying during the downturn, the same with the Roth--it greatly benefited me buying dollar cost averaging all the way down to the bottom--even though I didn't know it at the time. I kept buying, eventually moving into a DGI based investor with anything outside the kplan. And that's where I sit today with what I have...it's a fact I have what I have because of that massive recession. When the market goes down, I tell my friends this is when we make money! Real money!! Last fall when my friends were getting nervous and a financial adviser I know was spending all his time on the phone talking people to back away from the cliff--(selling). I was buying...I'm a Bull by heart but I welcome the Bear, I want that Bear because the Bear is vicious, spitting snarling crazy unpredictable beast that no one wants to face but it happens, when it turns into the Bull hold on for the ride! If no Bear? Corrections work well too....And it doesn't matter, buying on the way down or on the way up--dollar cost averaging is a friend.

There are countless ways to invest and the only right way is the right one for you, the one you feel comfortable with doing....I tell people that all the time...When someone asks me, "I would like to invest, what's a good way to go about it?" I tell them, know yourself first, get to know you yourself inside and out, what's your fear level? I have so little fear of a downturn that a good friend tells me I'm sick...he'll call me on a bad market day, week, month or whatever cause he gloats when he knows when I'm losing money and I tell him I'm buying!! I tell him to buy!! Then he calls me sick in the head and hangs up.

And you're right--it's really hard to find something in this market. I can see it being this way for another two years or so. All my contributions/divis have been going in cash accounts.


I'm not afraid of the market going down, I'm not afraid of losing everything...I'm afraid of getting sick, I'm afraid of friends and loved ones getting sick cause that's bad, really bad. I've been there--in that bed, I've seen people die right next to me, I've rubbed my grandmothers head and told her it was okay when she passed away, I was helping changing my grandfathers diaper when the last gurgling noise came out and I said he died--the nurse said I was just talking to him!! I said he's gone--I put my hand on his chest and sat there until it went from warm to cold--he was gone. I've watched my mother take her last breath, her eyes go black then sink, my step-father asking her to come back, please come back, he cried, we all cried. Last year one of my best friends was goofying around with his daughter and said...wow I'm really thirsty all of sudden, walked to the fridge and fell over...the doctors said massive heart attack, most likely gone before he hit the ground. Never sick a day in his life. Gone.

Money doesn't mean much...does it make life easier? Yes

Investing for me has become my safe-space...when I'm stressed, bad day...sit down read about a company, do some research, it's black and white.

Plus, I don't do FB much....it's here and SA....this is my FB lol

[ChadR]

Very well said rayray

[fenders53]

Thanks for sharing those very personal thoughts Ray.  I don't do well with death either.  It does put money in perspective.  Money isn't everything, but at the same time the stock market has become almost a hobby.  And though I keep it conservative, I suppose I enjoy  selling options because it adds some excitement.  If I stuck my investment account in a 2% CD forever I'd be just fine.  But I would miss the market.  I'd miss this forum too.  I power post it until you guys are surely sick of reading it all.  But I enjoy that too, and think I possess a little wisdom from all the hard knocks I endured, and many were self inflicted wounds to my port.  I know you guys don't need my hep, but there are some young person lurking this forum that could be helped.  Some kid that has never see the bear, and is pouring all his money into Netflix and a couple other momo stocks. 

In the end I hope to enjoy 10 or 15 years of retirement and waste at least a little money, then share some of the rest with my daughter while I am young enough to watch her enjoy it.  Hopefully she'll invest some of it but it won't surprise me if she doesn't.  My family sacrificed some while I amassed this port.  We could have went on better vacations, had more new cars along the way etc.  Nobody starved lol, but my wife taught my daughter to call me "Daddy-Neezer".  It came out Daddy-neeza because she was young.  She didn't even know what it meant yet lol.  

[Kerim]

If you guys are quite done with all of the big-picture-perspective and mortality and stuff (  ), I just read this interesting article and thought we could add central counterparties to the list of potential market-killing risks.

[fenders53]

(05-08-2019, 10:22 AM)Kerim Wrote: If you guys are quite done with all of the big-picture-perspective and mortality and stuff (  ), I just read this interesting article and thought we could add central counterparties to the list of potential market-killing risks.

Ray started it lol.  That was an interesting article BTW.  

.............back to Nostradamus mode for me.  Now listen up Kerim and I'll make us some big money lol .....

There is next to zero risk of a real recession in the immediate future.  The numbers absolutely do not support it. GDP growth, inflation, unemployment.  It just isn't there, and hasn't been for some time.   The market is  conveniently ignoring the fact corporate profit growth is slowing to a crawl for the vast majority of companies.  These stocks would have been crushed for earnings reports like this only last fall.  Now it's suddenly OK to grow 2% or even less YOY.  The FED will sit still enough IMO.

All that said I see a very choppy market for the foreseeable future.  I think the fast train to the sky is over.  I think the 500pt daily swings are back.  China is going to game us to some degree.  Our prez is going to try to play hardball but an election is coming.  He'll find a way to juice the market and fight the battle at the same time.  The election cycle will cause attacks on some of our favorite DGI stock's sectors.  I'll be very surprised if the market is anything but sideways for a year or more.  But there will be chances to buy low and sell high on individual stocks.  I will not be without cash to invest at any time.

The real recession comes when the bubble pops on all this loose monetary policy.  I don't know what year it happens or what county ignites it but it's coming.  It can't end any other way.