Tech Bellwethers..Recession is NOW

[Magus]

Even if the data wasn't mixed, the "NBER has not made the call as of yet..." would still be true. The GFC recession officially started December 2007, NBER did not declare it until December 2008. So, I doubt contrary signals are delaying a NBER statement.

Repeat after me: The NBER declaration of recessions is in the rear view mirror. If/when the NBER declares it to be so, WE WILL ALREADY KNOW.

Repeat after me: Having "good" unemployment and employment data is TYPICAL going into a recession. It is a lagging indicator.

Yup - NBER is nearly always late to declaring a recession. And stagflation is much harder to read and tell if we are in a recession or not than a normal deflationary/deflationaryish recession. I have not changed my AA much the last few years with existing investments. I exited about 10% of my stocks in Feb-March 2020 and got back in late May 2020. I've moved about 5% out of stocks this year into bonds and cash (which moved me up from nearly 0% bonds). The big change in AA for me was a big windful on the sale of my last company last June, which I plowed 75% in rental properties I own and manage myself. This has pushed my AA far more heavily into rentals, which I'm very comfortable since I am getting a 7%+ cash yield on their current net worth and 14%+ on my original investment.

 

[DJRR]

I, for one, appreciate all the different opinions that allow me to earn a market rate of return less fees in this great country. If I was playing with other people's money like Cathie Woods, getting paid to make calls like Jim Cramer, had inside information, or had a taxpayer funded put I would be all over it. It is a fascinating subject and heads I win tails you lose is a great business model if you are flipping the coin.

For my own money I will keep cash reserves, stick to my asset allocation, and rebalance as needed. Maybe someday I will even get to a positive answer to the question "Where are all the customer's yachts?"

 

[cyber888]

The Bear Market in Equities end 3-6 months before the end of the recession, because the market is forward looking. Since we are already in a recession, the contrarian view can be a bit different. The 10-Year yield is also sinking, which is positive for stocks. Sure it's possible we could hit below 3500 but gas prices are going down. The market is forward looking.

If you're in ER..Sell everything on the next major rally. Buy back at SPX in the low 3s, or sub 3K.

If you're south of 45 or so..buy and hold and ride it out.

Risk management is important in ER. Many of us may not have 10+ years to recover from a major market meltdown with a "buy and hold" strategy - and all signs are pointing to a major market meltdown later this year.

I hope to be wrong. But suspect I will not be. If I am, I'll be the first to admit it, because none of us can forecast what WILL happen. At best, we can forecast what is LIKELY to happen. And many (often unexpected) things will happen along the way to change what may otherwise be a fairly predictable trajectory.

 

[Montecfo]

OCD: bellwethers

 

[kgtest]

I see my neighbors trucks and SUVs parked a lot more. When they start commuting in them again, and stop complaining about the cost of groceries...then the dust has settled. In terms of a strategy...You can't go wrong with consistently buying into the market during the accumulation stages of investing. That is our strategy. We can buy more equities in the depressed market, which means more dividends, and when the tides come back and the boats raise up with the ocean....we still own more equities than if we were buying at a peak market. It goes up, it goes down...but then it eventually goes up.

 

[FIREarly]

What actions should be taken based on this information?

DCA

 

[pb4uski]

We been using the car for longer trips (30 mpg vs 20 mpg for the truck) nad buying more pork vs beef... just minor belt tightening.

 

[RobLJ]

Each day I assess things. We are rallying, am I wrong? The market is falling, am I too long? Or, is it an opportunity to pick up something low in its trading range? Is this the end of the bear market (e.g. we will have a very mild recession and then upward) or just a bear market rally (e.g. the market rallied 48% from 11/13/1929 to April 1930)? Yes, I know the market will rally BEFORE economic conditions show the all clear. Which is it? We will only know in retrospect, but I will respect this rally, try to play it, but at the same time keep a short leash on positions. (For example, I trimmed things Wednesday-Friday). Did I sell everything I had bought over the last month? No - but I did take some profits because they were there for the taking. Should I buy other things - are they going to join in? And so on. [This is the active investing, market strategy and alternative assets area. ]

Finally, back to your original question - which I can summarize as "At this point, what does it matter?" The truth matters, and crafting policy that recognizes economic conditions matter.

It must be wearying to have to continually reassess things every day. I'm just sticking to my allocation. While we may well be in recession--and I'm sure the big techs are starting to lay off--the employment data is in full employment. If the Fed keeps raising, a la Volcker, that will change, but I'm not sure what I'm supposed to do about it.
If the market declines another 10% I will buy about 3% of stocks. Rinse and repeat.
To attempt to time the bottom of a recession is a fool's errand. No-one knows how this will go. But maybe you should be Fed Chair; I'm convinced there are 4 or 5 candidates here. (Not me, though.)

 

[troutnut1]

Well folks, it looks like we are gonna be fine after all. The glass half empty people have been proven wrong again.


“Dow Up 200 Points As Stock Seeks To Break Two-Day Losing Streak”

Well it wasn’t really a “Two-Day Streak” because it was up and down during the two days. But saying a “Two-Hour Losing Streak” or a “Two-Minute Losing Streak” just sounds kind of silly right?

 

[jurgs01]

Well folks, it looks like we are gonna be fine after all. The glass half empty people have been proven wrong again.





“Dow Up 200 Points As Stock Seeks To Break Two-Day Losing Streak”



Well it wasn’t really a “Two-Day Streak” because it was up and down during the two days. But saying a “Two-Hour Losing Streak” or a “Two-Minute Losing Streak” just sounds kind of silly right?

You really think a few weeks make a bull or bear market trend?

Go back and look at a chart of previous bear markets. They are packed with 5-15% fool's rallies.

My best advice is to track historical sector valuations and buy when cheap. It is pretty easy to do.

 

[jimbee]

DCA

That worked well when I had a job.

 

[audreyh1]

We been using the car for longer trips (30 mpg vs 20 mpg for the truck) nad buying more pork vs beef... just minor belt tightening.

Are you already spending all your available annual income?

I just wonder about belt tightening due to market conditions when someone already has plenty of funds.

No belt tightening here because Covid and family obligations forced us to way underspend for over 2 years, and we still have a lot of catching up to do.

 

[pb4uski]

Are you already spending all your available annual income?

I just wonder about belt tightening due to market conditions when someone already has plenty of funds.

No belt tightening here because Covid and family obligations forced us to way underspend for over 2 years, and we still have a lot of catching up to do.

Nah, reality is that we probably only pend 1/2 of what we could... I just don't like waste.

 

[RobbieB]

But you are buying pork instead of beef even though you like beef better?

 

[pb4uski]

I like both, but I do like beef better. We do have some beef, just not as much. Really no need to, but frugality is just in our bones.

 

[copyright1997reloaded]

It must be wearying to have to continually reassess things every day. I'm just sticking to my allocation. While we may well be in recession--and I'm sure the big techs are starting to lay off--the employment data is in full employment. If the Fed keeps raising, a la Volcker, that will change, but I'm not sure what I'm supposed to do about it.
If the market declines another 10% I will buy about 3% of stocks. Rinse and repeat.
To attempt to time the bottom of a recession is a fool's errand. No-one knows how this will go. But maybe you should be Fed Chair; I'm convinced there are 4 or 5 candidates here. (Not me, though.)

Not wearing at all, I have fun with it. You do you, and it would be nice if we don't insult each other here...and "To attempt to time the bottom of a recession is a fool's errand" and "But maybe you should be Fed Chair" are veiled insults.

I don't have to time the bottom of the recession, nor am I changing the majority of my allocation (I remain 48% equities). What I try to do is to generate additional alpha via stock selection and by doing some adding or trimming, try to goose beta over market performance by a bit.

I have more money now than I've earned my entire life, after taxes, after divorce, after paying for houses, after paying for too many cars, after buying land, after an RV and associated expenses, after taxes, social security, and Medicare taxes, after fully funding college expenses, after ...

All of the above is because of my ability/luck to manage my own investments....and if I had been fed chair, I would not have pumped endless money into the system (not just Powell but excess QE since we successfully came out of the housing crisis).

 

[audreyh1]

Nah, reality is that we probably only pend 1/2 of what we could... I just don't like waste.

Waste? You are belt tightening because you thought your spending was wasteful before?

I don’t really get it.

We don’t constrain spending at all because we are still underspending.

I don’t consider our spending wasteful. We spend according to our priorities. Yeah, we could buy lower quality, but what is the point? High quality and convenience/comfort is important to us, although we do keep an eye on value.

I like both, but I do like beef better. We do have some beef, just not as much. Really no need to, but frugality is just in our bones.

And your heirs salute you!

 

[RobLJ]

I don't have to time the bottom of the recession, nor am I changing the majority of my allocation (I remain 48% equities). What I try to do is to generate additional alpha via stock selection and by doing some adding or trimming, try to goose beta over market performance by a bit.

I'm sure a little goosing is harmless, as opposed to trying to time by going all in or all out, which requires impeccable timing.

 

[aja8888]

I'm sure a little goosing is harmless, as opposed to trying to time by going all in or all out, which requires impeccable timing.

Not really, you just have to be in the ballpark on both ends. Hedge funds do this all the time.

 

[copyright1997reloaded]

Not really, you just have to be in the ballpark on both ends. Hedge funds do this all the time.

I'm too chicken sh*t to do that.

I'm also a big supporter of the slogan "live to play another day", i.e. preservation of capital. Nor would I know what to do with the money if I had 10X of what I have now.

 

[Chuckanut]

So far we seem to have dodged a recession. But.....

I had an interesting conversation with a contractor who recently did some work for me. He mentioned that his major supplier of HVAC equipment had cut his credit limit from $100,000 to $50,000. And warned him that that further cuts may happen as the bank is 'tightening things up'. He is worried he will have to ask customers for bigger deposits and that might hurt business.

He went on to mention that he saw this before in 2008. The difference is that the suppliers are not waiting until it's too late to collect from the contractors. They are taking this action early so as to not get stuck with huge amounts of debt they will never collect on from contractors who close up shop and disappear.

OTOH, the contractor who did the job for me is still new scheduling jobs with a four to six week wait until he has an opening.

I offer this as another data point. Make of it what you will.

 

[FIREarly]

What actions should be taken based on this information?

DCA

If it's possible and safe enough within you financials, DCA + a little extra $

 

[NW-Bound]

Not really, you just have to be in the ballpark on both ends. Hedge funds do this all the time.

Yes.

If you don't goose your portfolio by adding a little more stocks when people are crying in their beer, or lighten up a bit when they are exuberant, then what do you goose?

So far we seem to have dodged a recession. But...

Is that right? Hmmm... I missed the memo.