... OldShooter - perhaps you need some education!
Oh, I think 45 years of mostly successful investing experience has provided a pretty good education.
The yield curve/recession story comes around every few years. It is always pretty much the same: "The yield curve is inverted, we're gonna have a recession," "Jeeez where is that recession?," and so on. There is always a lot of chatter about the correlation between the yield curve and a subsequent recession, but it always turns out that the uncertain timing means that the yield curve information is not actionable for investors. Actually there are many "leading economic indicators" that together still don't allow the economists to accurately predict recessions. For more on this, read Nate Silver's "
the signal and the noise" or at least his chapter on economic forecasting.
Whenever the yield curve inverts there are always those who offer various naive methods for forecasting the "inevitable" recession and taking advantage of that knowledge. Sometimes someone gets lucky, like our @vchan here on his exit decision. (He still has to re-enter successfully to declare a win.) But think about this: there are a lot of smart people out there. (@vchan might even admit that there is probably a tiny sliver who are smarter than he is.) If yield curves
did provide consistently reliable and investable information, those smart people would have had it arbitraged away by now. If you want to read something that is not naive, Google gave me this:
https://www.bostonfed.org/publicati...dicting-recessions-using-the-yield-curve.aspx from the Boston Fed. It discusses a number of indicators, including the yield curve. Regarding 2019, when @vchan went to cash: "After the stance of monetary policy is taken into account, the probability of a future recession as of the third quarter of 2019 is lower, often noticeably so, than the signal obtained by relying exclusively on the yield curve." Complicated stuff. (No I did not read the paper in detail.)
Another interesting aspect of @vchan's genius idea is the cause of the current recession*. He says he made his decision based on the financial indicators but the current recession has had nothing to do with financial indicators. It was caused by the pandemic and consequent shutdowns of economic activity. So does his view mean that the pandemic was simply a coincidence and that the recession would have happened exactly now, anyway? Certainly he does not think that the inverted yield curve predicted the pandemic?
This yield curve stuff seems to be all new to @vchan so I can see why he is quite excited about it. It is really pretty old news.
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*Technically I don't think we are officially in a recession. That is a lagging call, but I certainly think the call will be made at some point.