For those wanting to prepare for next recession

Investment Analysis Clubs Saul’s Investing Discussions
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https://finance.yahoo.com/news/invest-next-recession-1750187…

Not my sort of thing, but since the topic came up. If one is interested this story is all about preparing now, in good times, for the next recession.

Maybe this time it will come. Maybe not. That is the problem, you never know, and even if you know, by the time you know, it may be too late.

Take the 2009 recession. There were warnings. Multiple people screaming on line about the housing market. I know in the real world I had clients trying to recruit me out of my own business to become their attorneys to close real estate financing deals.

I had too many, to make sense, mortgage broker clients, with what appeared to be little background, making 6 figures selling mortgages. I wanted $500k to buy a house, the mortgage broker tried to get me to take $1.5 million. I politely said no. But I guess many others did not. So the signs were all there.

Regardless, by the time most people knew, the stock market had already crashed, and most people had sold in a panic near the bottom. As is usually the case.

My defense is to buy only quality companies at non-bubble pricing that I can confidently hold through thick or thin. One reason why I only hold so many stocks at a time. Then add monthly, or hold cash and add a lot when I think it is a good time. But others may want to take more drastic measures.

The above is an article for those people. I cannot say that preparing for the next recession now will be a good or back thing. No one can. I can just say that I want to hold the best growth companies at non-bubble prices until it comes time to find the next wave of such companies. And they always exist, always disruptions in business models, technology, etc.

When we start looking at biotechs too closely that is usually a good warning sign. But this board did very well with KITE, thus it makes sense they wanted more and looked into NKTR. I held it for 2 days and sold out for a small loss.

When I start looking at biotechs seriously then I know there is not much worthy of investing in within my universe.

As of now, except for my interest also quickly being drawn in to NKTR, partially influenced by KITE, I am still disinterested in biotechs. A little to obsessed with Talend, but we all have our own stock fetishes.

Tinker

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A little to obsessed with Talend, but we all have our own stock fetishes.

Tinker

How much of that is simply due to covering every base with Pivotal and MongoDB already, and the recognition with a high degree of confidence that NVDA is THE present Gorilla and is unlikely to be disrupted anytime soon, despite Intel’s neuromorphic aspirations? It almost seems to me that NVDA is basically just toying with Intel and AMD with delaying the release of the Turing architecture, almost like they might simply be holding that ace in their hand, waiting for AMD or Intel to show their next “queen” or something.

-volfan84

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Take the 2009 recession. There were warnings.

Because I also like to manage risk, maybe it’s helpful to brainstorm possible signs in today’s landscape and theorize whether they matter? Maybe that deserves its own thread, so I won’t dump a bunch of ideas here and hijack the thread if that wasn’t your intention, Tinker… but I’m curious what others think about or are watching out for or have made mental notes of.

Me, I’ve been moving in and out of 12-15% cash over the last year, waiting for that next big opportunity, so hedging both ways.

(NVDA is still my second love… I’d marry it if I could, but don’t tell Wife 1.0.)

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Take that to the METAR board, or maybe start one with rules like Saul’s.

I have considered it more than once as the METAR board has declined in quality.

However, I will point out that method has proven to have negative returns.

Cheers
Qazulight

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I think the conversation would be fine on NPI. Mauser has been working on this for while now. Inverted yield curve is the #1 thing to look for.

There is nothing as blatant as the housing crash or internet bubble out there at present. Just a more normal environment.

Netflix’s miss could be a contagion. I just discussed this on NPI a bit, even though it seems unconnected with everything else. So that may be a good place to take it.

I do not want to hog up this board discussing it other than to provide an answer to the poster who appeared to be asking for one.

But in my mind, until the cloud titans stop expanding, the cloud stops growing, Big Data stops spreadings its wings and innovating, AI captures the world, and 5G proves to be a bomb, I am not too concerned, even if we have a terrible temporary down drift. Fundamentals rule in the market absent a horrific Black Swan event (again, an NPI topic)

Tinker

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there definitely are ways , probably to not predict market collapses but to recognize them in the early stages, to put the odds on your side.
The METAR board is useless IMHO. Look rather to the Mechanical Investing board for data based data proven ideas. But Saul does not like timing discussions so I will not go into it here.

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Not wanting to belabor things, but I would simply point out that the US equity market has never been able to weather an inversion of interest rates (for example when the 2 year Treasury rate is higher than the 30 year rate). You can use it as an extremely powerful leading indicator, or not, depending on your preference towards market timing.

Currently, the two rates are converging on trajectories which would make a cross-over likely in about a year if nothing changes.

While, other than WendyBG’s occasional posts METAR has diminished usefulness, as has been pointed out, there are other timing signals tracked on the Mechanical Investing board, but the rate inversion signal has always been nearly a sure thing.

Jeff

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re yield curve, we still have a long way to go before it is likely to impact equity markets

https://www.marketwatch.com/story/why-stock-market-investors…,

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