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I have never seen an international organization or country predict a recession before it is too lat
Bah wWe have posters on CD who will correctly predict the next recession. They just keep saying it's around the corner for enough years until it happens, then brag about how they happened to have just cashed out of the market right before.
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Originally Posted by Camlon
Of course it is possible that the economy just keeps growing, but that has never happened before. I believe history has a tendency to repeat itself.
It depends how you look at "keeps growing" in the context of time. Over a long enough window the economy has indeed kept growing.
Bah wWe have posters on CD who will correctly predict the next recession. They just keep saying it's around the corner for enough years until it happens, then brag about how they happened to have just cashed out of the market right before.
Sure, but I haven't done that and what other users do is not related to me. I also won't brag about being right.
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It depends how you look at "keeps growing" in the context of time. Over a long enough window the economy has indeed kept growing.
What I mean by keep growing, is that we will not experience a recession, not that the long term growth rate is positive. By that definition, over a long enough window it is impossible to keep growing.
I feel like the economy is more fragile than we believe it to be, with credit card charge-offs and delinquencies, along with total personal debt either above or nearing record high levels. Yes, some of this is due to the nature of a low-rate environment, but the funky thing I believe is that credit is what has been fueling the economy, when the majority of people have seen a rise in prices since the last recession, but very little gain in income, unless you're in the upper echelon and had money to put away.
This is especially the case for renters, who have seen rents climb in many markets with housing shortages - I've heard many stories of people in places like Atlanta and even Pittsburgh where people are spending nearly 40-50% of their income on housing, which is a really unsustainable figure. Heck, it's still nearly 35-40% in a market like the Chicago suburbs, which has seen a significant population outflow. They laughed at me when I said that I was sitting around 15% and didn't really want to increase that significantly if I had to take a job in the Chicagoland area.
We've started to see the huge RE market boon start to wane here in Louisville, but uncertain if it's just a slow buildup to the summer, or if people are truly exiting the market because they're aware of the higher-than-they-should-be home prices and waiting it out, or if there's an economic factor in their personal situations. For me, the last 2 years saw about a 30% increase in home values in the Louisville market. That is claimed to be a correction that they never saw in the prior 20 years, but since it's echoed in other markets as well, I think it was something to do with the housing shortage in the area with life expectancy on the rise coupled with a new construction shortage in the desired price window, primarily attributed to the lack of available talent due to the opioid crisis which caused build costs to rise significantly, and a lack of cheap labor, possibly due to deportations from the Obama era through now.
A builder here told me that he can't profitably build a $250k home these days. He can do $350k+ though, but magically there aren't enough buyers once you get over the $400k mark in this area, so it's a bit of a catch-22.
I was looking at the job numbers, thinking about personal debt, housing etc.... on friday and thinking about the past several recessions I have experienced. We are getting closer for sure. When people on the sidelines all start to make a mad dash to jobs who haven't worked in a long time, things aren't going so well out there all of a sudden.
Also, when the herd charges all at the same time to something that is suppose to help them solve their financial issues, it is coming sooner than later.
The only issue is that we still have way more slack in labor than anyone thinks or wants to believe, so it might push back another recession for several extra years.
I was looking at the job numbers, thinking about personal debt, housing etc.... on friday and thinking about the past several recessions I have experienced. We are getting closer for sure. When people on the sidelines all start to make a mad dash to jobs who haven't worked in a long time, things aren't going so well out there all of a sudden.
Also, when the herd charges all at the same time to something that is suppose to help them solve their financial issues, it is coming sooner than later.
The only issue is that we still have way more slack in labor than anyone thinks or wants to believe, so it might push back another recession for several extra years.
I graduated into a recession in the early 1990s. It was horrible. I was a young college graduate eager to star a "yuppie" career path but was living at home with my parents. I finally got an internship after months of hard searching. Then I went to graduate school the first time. I finished and got into a booming career in software back in the late 1990s. In three years I went from entry-level to manager making a relatively large amount. Each time I quit a job I got a raise and promotion.
But the recession of 2000 hit hard. By 2001 many IT software jobs were in decline. I was at a startup that went out-of-business. I went from making $80,000 per year with benefits to being unemployed in 2002. While in the midst of a harsh job search, I was just doing night stocking and contruction labor like Peter at the end of the 1999 film "Office Space" - LOL.
I learned that the job market has a recession about every ten years. I graduated into one in 1991. There was a another recession around 2000-2001. The great recession hit in 2009. By 2008 I had earned another master's degree in preparation for an anticipated recession which was horrible for many people. But that time I was ready.
Now, in 2018, I am expecting another recession within the next several years. I am preparing for that one by studying artificial intelligence, machine learning, and Python. I figured if another great recession hits a lot of companies will push for automation. I am preparing for that just like I did in 2008 for the recession of 2009. I believe another one is coming. It always does every ten years or so going back to the 1970s. There was a recession around 1974 related to oil. And there was a similar recession in the early 80s.
Why do construction labor in the next recession at minimum wage when I can just work on automation and artificial intelligence? My back can't handle that anymore anyways. The only good thing about construction labor was being in real good athletic condition. It was bizarre to go from a high paid engineer in 2000 to an underemployed labor worker in 2002. It really was like "Office Space".
Bah wWe have posters on CD who will correctly predict the next recession. They just keep saying it's around the corner for enough years until it happens, then brag about how they happened to have just cashed out of the market right before.
Not right before, but there is always a time to take your winnings off the table. I have been out of equities since last August. That doesn't mean I don't have any returns, they have just been 5.8% instead of whatever I would have made in stocks.
That strategy is simple arithmetic. If stocks drop 30%, it takes 4 years of 10% gains to get back even, because you are starting with a reduced basis. Meanwhile, if I forego 20% of gains before the downturn, then bargain hunt after the crash, my gains in the subsequent 4 years are 30% higher than the blind sheep who thought stocks would always go up.
It's just simple arithmetic. Granted, that is beyond the capacity of the vast innumerate horde who think they are investors. There are two fundamental rules that, taken together will always result in fantastic market gains:
There is so much fail in your post, much that is typical of someone who thinks way more highly or their abilities than they actually are.
It's actually pretty low level thinking, and not complicated at all. Boom times, prices go up, sell equities. Put the money in fairly stable investments that will only lose a little bit instead of a large percentage. Crash time, prices go down, buy equities, because they always recover impressively. It's really just simple arithmetic.
The fail is knowing when prices have gone up enough, or down enough. Of course you're going to claim you timed everything perfectly because everyone on the internet says that, but following your strategy someone could have just as easily sold equities in 2012 because equities had gone up over 50%. That person would have trailed performance of someone who just dumped their money in an index fund and ignored it.
Everyone knows buy low and sell high, yet very few people consistently beat the indexes. That should tell you something.
The only time I ever hit the absolute bottom of the market it was pure dumb luck. I have never in my life hit a market peak "perfectly." However, I certainly didn't sell equities in 2012. I'm happy to stick with the market until the phrase, "Irrational exuberance," starts to ring a bell. If you stay in the game long enough, the cards will turn against you. Sticking in an index fund is making the same bet, over and over, each time for higher stakes. There comes a time to put a leash on greed and take your winnings off the table.
I have no problem settling for more modest but secure returns until the direction of the market becomes clear. If you want to be a big player, it's your money. I think people get hypnotized by big numbers when the market is flying, and think they actually are that rich. They ride their investments right off a cliff. It's really hard to explain that a 20% loss followed by a 20% gain still leaves them in the hole.
If you have a dollar and lose 20%, you have 80 cents. If you then have a 20% gain, you earn 16 cents, which still leaves you 4% in the hole.
If you have a dollar and put where you get a secure 5% gain, you have $1.05, while the same dollar in riskier investments could have turned into $1.10. Then the 20% loss turns that into 88 cents. Move your $1.05 back into stocks and catch the 20% gain, and you end up with $1.21, while the guy in the index fund ends up with $1.06.
You don't have to "time the market." It's a spread, not a target. You can keep right on making gains, just not in the high risk, high return sectors. I figure there's a better than 80% chance there will be a recession in the next 3 years. That means there is a 20% chance I will be stuck with only modest investment growth, vs. an 80% chance that I could preserve my capital and dump the whole thing into a quick 30% gain, that would yield a tidy profit while the guys riding index funds would still be struggling to get back to even and looking at a period of negative returns.
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