Soft landing or hard landing for 2023?

[Car-Guy]

I'm bailing out before the crash.

 

[dmpi]

I predict a hard landing. But it'll be the end of 2023 before it to happen. I expect equities to have a repeat of 2022.

 

[Dash man]

Everyone seems fearful, so I’m rebalancing a little to increase my equities a bit. Steady dividends and higher interest rates help a lot.

 

[disneysteve]

The effects of inflation have already made consumer spending reduce, including the holiday spending FWIW. I expect that will continue.

Both Black Friday and Cyber Monday set all time sales records but I don’t know how the rest of the season has gone.

 

[NW-Bound]

I dunno. What's the definition of a hard landing, and a soft landing?

I will cast my vote for something in between: a firm landing.

 

[RobbieB]

Any landing you can walk away from...

Yeah, doing nothing also.

 

[donheff]

I'm an optimist at heart so I selected soft to reflect my rosy outlook but my financial planning was and is based on hard.

 

[easysurfer]

Hope I'm wrong. But my gut says hard landing .

 

[Midpack]

Well to begin with hard and soft landings are typically in reference to the economy, not the stock market. The stock market is not the economy and the economy is not the stock market.

That said, I'm hopeful for a soft landing or mild recession. OTOH, I think the stock market is likely to flounder around in 2023.

No idea, like everyone else. My IP doesn't change either way...

 

[Lsbcal]

Well to begin with hard and soft landings are typically in reference to the economy, not the stock market. The stock market is not the economy and the economy is not the stock market.

That said, I'm hopeful for a soft landing or mild recession. OTOH, I think the stock market is likely to flounder around in 2023.

You are right about the typical use of those terms. But since I am focusing on the stock market and my actions in it, I am using those terms for it. Plus the Canada Goose picture in the OP was funny so had to work that in.

A hard landing for stocks would probably mean around a -35% decline from the Jan 3 2022 high. A soft landing would imply the previous May low of -25% will hold. I'm thinking hard landing for the economy and also for stocks but I use a mechanical approach to allocations so not exactly acting on my feelings directly.

 

[COcheesehead]

Based on this forum and a few others I visit, a lot of people are buying individual bonds. When you can get 4.5% - 5% on CDs, 6%+ on AAA rated bonds, etc, it pulls money away from equities especially in the face of uncertainty.
The mess we are in will take another couple years to unwind similar to 2000 - 2003.

 

[audreyh1]

No idea, like everyone else…

Yep, I’m content to sit back and see what happens.

The only actionable thing for me is rebalancing after the fact as usual.

Based on this forum and a few others I visit, a lot of people are buying individual bonds. When you can get 4.5% - 5% on CDs, 6%+ on AAA rated bonds, etc, it pulls money away from equities especially in the face of uncertainty.
The mess we are in will take another couple years to unwind similar to 2000 - 2003.

And that’s OK with me. When people run away from certain asset classes because of fears of further dropping (self-fulfilling behavior in part) it gives me an opportunity to buy more low. So I tend to be fairly sanguine about intra-year market moves and volatility. It seems most people get quite anxious about what’s going to happen in the near term. C’est la vie!

 

[Lsbcal]

...

And that’s OK with me. When people run away from certain asset classes because of fears of further dropping (self-fulfilling behavior in part) it gives me an opportunity to buy more low. So I tend to be fairly sanguine about intra-year market moves and volatility. It seems most people get quite anxious about what’s going to happen in the near term. C’est la vie!

But what do you do if stocks/bonds are your main source of wealth and a mild downturn develops into a full fledged depression? It would undoubtedly take events unknown to anyone at the present. Not referring to retirees that have a sizable pension or a rich old uncle who is set to go soon.

You are OK if you have a really big portfolio, say greater then 25x your basic spending needs AND you are not too young. But otherwise you might get in trouble.

In any case if one has a sell strategy (not ad hoc) it should be coupled with a repurchase strategy and acknowledged that whipsaws are very possible. If you are into buy-hold you must hold for the very long term.

 

[COcheesehead]

Yep, I’m content to sit back and see what happens.

The only actionable thing for me is rebalancing after the fact as usual.


And that’s OK with me. When people run away from certain asset classes because of fears of further dropping (self-fulfilling behavior in part) it gives me an opportunity to buy more low. So I tend to be fairly sanguine about intra-year market moves and volatility. It seems most people get quite anxious about what’s going to happen in the near term. C’est la vie!

I am not sure it’s a fear of further dropping as much as it is knowing what one needs to succeed and if that outcome can be achieved with less risk, then why move further out on the risk scale.

 

[audreyh1]

But what do you do if stocks/bonds are your main source of wealth and a mild downturn develops into a full fledged depression? It would undoubtedly take events unknown to anyone at the present. Not referring to retirees that have a sizable pension or a rich old uncle who is set to go soon.

You are OK if you have a really big portfolio, say greater then 25x your basic spending needs AND you are not too young. But otherwise you might get in trouble.

In any case if one has a sell strategy (not ad hoc) it should be coupled with a repurchase strategy and acknowledged that whipsaws are very possible. If you are into buy-hold you must hold for the very long term.

We’ll all be in a tough boat. I just don’t worry about it as it doesn’t seem very likely like it did to some extent after 2008. I don’t have a sell-out strategy. I also have plenty of cash on hand as we have been underspending for several years.

 

[audreyh1]

I am not sure it’s a fear of further dropping as much as it is knowing what one needs to succeed and if that outcome can be achieved with less risk, then why move further out on the risk scale.

Honestly, I think the recency bias of fear of dropping further is quite common.

If your investment strategy is short term, not long term, I don’t see how you’ll live with the volatility. But volatility is just part of investment life. If you think you can outsmart it, go right ahead.

 

[Midpack]

But what do you do if stocks/bonds are your main source of wealth and a mild downturn develops into a full fledged depression? It would undoubtedly take events unknown to anyone at the present. Not referring to retirees that have a sizable pension or a rich old uncle who is set to go soon.

You are OK if you have a really big portfolio, say greater then 25x your basic spending needs AND you are not too young. But otherwise you might get in trouble.

In any case if one has a sell strategy (not ad hoc) it should be coupled with a repurchase strategy and acknowledged that whipsaws are very possible. If you are into buy-hold you must hold for the very long term.

So you’re a trader, market timer. Takes more skill to succeed than I have.

As you know, FIRECALC includes the depression, numerous recessions, wars and geopolitical events. Having a pension or a rich old uncle isn’t required to be a successful long term, buy and hold investor.

 

[Lsbcal]

So you’re a trader, market timer. Takes more skill to succeed than I have.

As you know, FIRECALC includes the depression, numerous recessions, wars and geopolitical events. Having a pension or a rich old uncle isn’t required to be a successful long term, buy and hold investor.

I think FIRECALC is a pretty good tool. But I would rather take the chance of a modest whipsaw then putting myself through the ringer. I do not think FIRECALC is set up to take care of really worst case *future* possibilities. Some of those curves that can approach zero and then turned up ... well I'm not confident I can live with that.

But to be clear, I am only choosing for myself and not making a general statement on strategy. All of us have such different situations and risk tolerances. So no way to generalize.

 

[COcheesehead]

Honestly, I think the recency bias of fear of dropping further is quite common.

If your investment strategy is short term, not long term, I don’t see how you’ll live with the volatility. But volatility is just part of investment life. If you think you can outsmart it, go right ahead.

It’s not about avoiding volatility, but taking advantage of something I haven’t seen in a long time, if ever, in my investing life and that is what the fixed income markets are currently giving us.

 

[marko]

My guess is as good/bad as anyone else's but I'm fully expecting a hard landing.

There's just too much complexity in the economy to hope otherwise.

 

[MichealKnight]

Soft?

I'm usually a pessimist and nervous nellie, even in my 'apex' years where my businesses were just plain profitable and fun - I was always a worrier all the time.

Barring major geo-political surprises....

LABOR
*****
Yes, we see it on the news. Yes there will be more. But - is it going to be huge mass layoffs? OR - more targeted to a - uh-um-segment of the labor force that might have had it rather good for a few decades - where they supported things like "efficiency" and extolled the virtues of "oh just go get retrained". I mean yeah they can tweet about it, Facebook about it, write to the CEO, demand swag budgets back, etc - but the layoffs seem at least for now to be in that echelon.

Retail Sales, Construction, the trades, educators, health care, travel leisure, services....at least for now - they are short of people. Things would have to get really nasty for those people to get laid off and many of those businesses remember how hard it was and is to put Humpty dumpy back together again.

HOMES
******
Less transactions? check. More days on market? Check. Lower prices? Check. But prices are still well above pre-pandemic and in the "under 400k" segment I tell you what, in a handful of bedroom metro communities, many listings show 'under contract'. - - Inventory of housing is still not robust, compared to the population growth and household formation. Sure - mass layoffs? Houses go under. It's a chicken or the egg thing to me.

AUTOS
******
So the media will report "supplies increasing". -- yeah, ok. But from what? Not that hard to report an increase.

At least for 2023 - barring mass layoffs the demand is there. Pent up demand is there.

Unless the Machine needs hoards of young recruits - I don't think they're going to really whack the labor force that much.


Back to Labor...
*************

I'm not sure the middle and lower echelons of the labor force - who KNOW they are in demand are going to give up their raises.

A tribalistic environment, where countrymen - don't heave as such - can't have even a discussion on immigration so that avenue might be void.

Abroad......

Some movement away from China. Many who extolled the virtues of fairness, and ideals, well, - they have discovered that in some cases they have to move away and lose the advantages of authoritarianism over workers and headed to other developing nations.

Nations while poor.....see an exploding middle class by the day. Those "workers" ....are humans. They'll want to trade up. They'll want to trade walking for a bike, a bike for a moped, a moped for a car. Trade in rice for chicken and who knows, a steak even . Health care. Travel. Eating out. Electricity. Methinks that the "emerging workforce" while CHEAP- won't be dirt cheap like before and who knows - eventually will require a few bucks more to work.

So if homes and cars are not in a ditch - I can't see unemployment going to 7-8%. 5- ok.

So for me - soft landing.

And - I feel 3-3.5% will eventually be the stated, acceptable. and normalized inflatioN for awhile - until A.I really goes mainstream....and then we're all going to be here or on other forums, talking about things we didn't think we'd have to talk about.

Anyhow, appreciate everyone's wisdom and experience and help here. Really as a rookie - - I really do. I don't have any idea if today was when the Prince of Peace was born or not, and whether you do - or don't know - -- - God rest ye merry Gentlemen and Ladies.

 

[marko]

OTOH.
I already voted and already posted @ #45, but who and how is a soft or hard landing defined?

Who gets to declare a soft landing? We've already seen mixed definitions of whether we're in a recession or not. So, how is the call made?

 

[Lsbcal]

OTOH.
I already voted and already posted @ #45, but who and how is a soft or hard landing defined?

Who gets to declare a soft landing? We've already seen mixed definitions of whether we're in a recession or not. So, how is the call made?

It's like porno, you know it when you see it.

Quote by Supreme Court justice:

I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description ["hard-core pornography"], and perhaps I could never succeed in intelligibly doing so. But I know it when I see it ...

https://en.wikipedia.org/wiki/I_know_it_when_I_see_it

 

[kgtest]

Haha. First to vote. I said hard. Planning on -15% equity market. Personnaly sitting pretty good. DW and I at 51 and 57 still working. FI but working. Plenty of time off for travel. Feb=2 weeks in St Croix, Apr= frozen 4 in Tampa with my son. First week of June=Quick 5 days to Belfast to see our British friends. July=one week in Costa Rica all inclusive dive trip. October=Rock festival in Vegas with my son.

2 military retirements are COLA along with jobs. Work at least through 2023 for me. DW probably 4 more years.

Best of luck to all of you in 2023. Should be an interesting year. Between 401 and play account, I will drop 30-40 into the market. Will add 5-10k to cash reserve.

That's a solid yearly itinerary!

I am only 41 but envious. Grateful we have been able to do some travel with our family of 5.

Jan - 8 nights in Orlando Meeting my folks to do Disney with our 7, 5 and 2yr old
Early April 3 day trip meeting up with cousin to Bristol for the dirt track Nascar Truck series with my 7 and 5yr old
End of April after Ramadan - 10 day trip with a day in NYC and a layover in Paris before we reach Casablanca for a Morocco guided tour
May/June 4 day weekend getaway daddy daughter trip to NC/SC to visit friends
October - Tentative trip to Ireland with DW for our 10 yr anniversary

We have a couple of Cabin /lodge trips "up north" at lakefront destinations with close family. One in the summer, one over Labor Day

A trip out to Wisconsin Dells this summer to the water parks with some neighbors who have kids around our kids ages.

Oh...as for the soft or hard landing... full send hard landing face first like the goose in the second picture haha. I mean why not, it's already been a disastrous year.

 

[jldavid47]

Haha. First to vote. I said hard. Planning on -15% equity market.

15% isn't a hard landing lol. 50% would be a hard landing.