How does this decline compare to previous recessionary ones?

[cat4ever]

As it relates to my retirement standard of living (or whether, oh crap, i might have to work again), I think a redefined one that does take inflation into account would be more interesting, and isn't that the bottom line of what everyone here is trying to measure?

 

[Bigdawg]

As it relates to my retirement standard of living (or whether, oh crap, i might have to work again), I think a redefined one that does take inflation into account would be more interesting, and isn't that the bottom line of what everyone here is trying to measure?

Most people's big three (aprox 80% of spending) is food, housing and transpo. My mortgage did not rise. Some home expenses rose slightly. My car is still paid off. The diesel gas I put in it is currently $3.31/gal vice the $6/gal I was paying 24 months ago. Much of my food intake is discretionary. I can substitute, use coupons and choose to not eat out as much. This response is more appropriate for the inflation thread but you were commenting on inflation so I thought I would add some perspective. Sorry for the thread drift.

 

[audreyh1]

Where is that highly anticipated recession? That would derail the 2022 line quick. Yet we haven’t seen it in the face of extended high rates and a hugely inverted yield curve by historical measures. Hard to know what to expect.

 

[donheff]

This might be my last updated chart for the 2022 bear market. Looks like we can welcome a new bull market. At some point you have to call a bull a bull.
UPDATE:

You’ve done it now, we’re doomed. ?

 

[Lsbcal]

You’ve done it now, we’re doomed. ?

You have permission to blame the next recessionary decline on me.

 

[Lsbcal]

As it relates to my retirement standard of living (or whether, oh crap, i might have to work again), I think a redefined one that does take inflation into account would be more interesting, and isn't that the bottom line of what everyone here is trying to measure?

Somewhere in the above posts I mentioned that those "X" marks include inflation at the bear market lows. Note the 1929 one included a big dose of deflation.

 

[ImThinkin2019]

lbscal, thank you for doing this for all of us. You have done a great service to a small portion of mankind.

It has been of great comfort to my DW and I to look at history. You provided it in an easy to visualize format.

Thanks again and best wishes to you!!

 

[harllee]

I have learned a lot from these posts, thanks lbscal. I was for sure we were headed for a recession, but I am glad to be wrong!

 

[matjung]

The worst could still be in front of us.
My impression Capital concentrates around Large Cap Stocks.
The bankruptcy cases among mid cap companies in Europe is clearly going up.
So do profit warnings of industrial companies.

Keeping zombie companies alive is not affordable anymore.
When Debt is due for renewal rates of 5%+ are hitting the economy.


Montecfo, do you have correlation numbers?

 

[Montecfo]

^^^

No but I share the concern. Be aware we have had "bull markets" (e.g. 20% rally) previously which turned out to simply be bear market rallies. See article and graphic below.

Until we take out the old highs it is not confirmed as a bull market in my opinion.

And of course we are in uncharted territory. We have never had an economy boosted by this much fiscal stimulus. Will the unwinding make the landing soft? Hard to say. If the Fed indeed intends to kill employment we may not have hit the lows.

We rallied because the market perceived last fall seemingly accurately that inflation had peaked. But now we have this "higher for longer" narrative from the Fed. And the yield curve remains steeply inverted. Not historically a great environment for stocks.

Now, we could have a full blown recession and still avoid new lows in stocks. The economy is not the stock market. But it seems challenging with equity values back at historically high levels. The key will be whether earning growth returns. This rally has been built on multiple expansion more than earnings growth. In fact, we are in an earnings recession, meaning corporate earnings have declined each of the past two quarters.

So earnings growth must return if we are to continue higher, in my opinion.

In fact right now I like bonds more than stocks.
https://www.moneyshow.com/articles/...dy of bear markets,of their 1929 Crash losses!

 

[eytonxav]

The worst could still be in front of us.
My impression Capital concentrates around Large Cap Stocks.
The bankruptcy cases among mid cap companies in Europe is clearly going up.
So do profit warnings of industrial companies.

Keeping zombie companies alive is not affordable anymore.
When Debt is due for renewal rates of 5%+ are hitting the economy.


Montecfo, do you have correlation numbers?

I don't know whether I would refer to small businesses as zombie companies, but the cost of capital to companies for investment in their businesses is exorbitant and difficult to get. That may not bode well for the economy, especially with a few more rate increases possible.

 

[street]

Thanks for the charts. I hear the heads and have read numerous times lately that a recession will most likely occur in 2024 late in the year. I don't remember their reasoning behind their thoughts on it.

As for now it appears like some gains are in the future and more sideway activity like we have seen for some time now.

 

[jimbee]

Thank you for these updated charts, Lsbcal. I was able to talk a family member out of making a rash financial move last year, showing them your chart.

I see and hear lots of prognostication about what financial future will occur here and elsewhere. Well, it appears that nobody still knows nothin'.

 

[target2019]

This thread provides a lot of interesting comments. I find myself straying back and forth between stock market cycle and economic cycle concepts. They are defined separately, but are related.

Whether leading or lagging, I expect a new data plot. The desire of many is that we follow a smooth path upwards. But why do we ignore 1980 plot? That seems to be the closest fit, and with a 20% drop coming up. Some comments driectly above support that.

 

[Lsbcal]

Analyzing my own state of mind, I was very elated at some market peaks. This was particularly true of December 2021 at the market highs. So in the future I hope to reduce equity to a more conservative level when the portfolio is reaching new highs and I'm feeling flush. Not near that point yet.

 

[Gearhead Jim]

Labcal has done a great job for us. But for me, the recent chart update shows "image not found or was removed", whether I use Chrome or Edge as my browser. Previous versions of the chart look fine. Anyone know how to view it?

Also, there must surely be someplace that shows the stock market (DJI, SP500, etc) in inflation adjusted dollars. To be more precise, they could show the value including dividends. But a non-inflation-adjusted number is most useful only to those who don't need to spend the money to stay alive.

 

[target2019]

Image is there for me. Maybe you have scripts blocked?

 

[ImThinkin2019]

Labcal has done a great job for us. But for me, the recent chart update shows "image not found or was removed", whether I use Chrome or Edge as my browser. Previous versions of the chart look fine. Anyone know how to view it?

Same here. I could see it earlier today from a different city, but have returned home and see the image hosting has been blocked or removed. I tried resetting my browser to original settings (I use Opera) with no luck. Could not find any way to enable or disable scripts.

 

[audreyh1]

No problem seeing the chart from Safari on my iPad.

 

[Gremlin]

No problem seeing the chart from Safari on my iPad.

Weird. I’m using safari on my iPad too but it is blocked for me as well.

 

[jurgs01]

I have learned a lot from these posts, thanks lbscal. I was for sure we were headed for a recession, but I am glad to be wrong!

This post makes me bearish.

 

[steady saver]

I can't see the chart either.

 

[audreyh1]

Apologies to Lsbcal, but maybe some folks can see this (downloaded from post #323). It’s just a jpg so I don’t understand the problem unless the hosting url is being blocked for some reason.

 

[aja8888]

Apologies to Lsbcal, but maybe some folks can see this (downloaded from post #323). It’s just a jpg so I don’t understand the problem unless the hosting url is being blocked for some reason.

I used to see his chart, but today I don't. Strange.

 

[REWahoo]

I used to see his chart, but today I don't. Strange.

Same here. I now see this: