Someone should A) run a neural network across thousands of historical economic / financial metrics and find the best predictor B) ?????? C) Profit!!!
Someone should read up on Long Term Capital Management.
‘A Powerful Signal of Recessions’ Has Wall Street’s Attention
281–289 of 289 posts
Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention
#282Earlier quoted context omitted.
The stock market is not the economy.
How do you propose to measure economic health?
I'm not an economist, but:
One way might be to measure average incomes against cost of living. The economy is healthy if the majority of incomes are going up faster than the costs of living are.
Another might be the percentage of adults who are collecting incomes, based against the average of incomes. (Effectively, a more accurate unemployment figure).
Another way might be to measure the average amount of savings individuals hold. Or, their assets, excluding homes and automobiles.
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I would propose that the stock market is probably the worst way to measure economic health. Because the vast majority of the population owns no stock themselves but must be customers of these companies, so the vast majority of the population only suffers when stocks price changes for any reason (both when it goes up, and when it goes down).
Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention
#283Earlier quoted context omitted.
Without knowing anyone's individual situation it's hard to answer, but at the very least you should have 3-6 months expenses in a money market / savings account. You don't want to be in situation where you are forced to liquidate assets at below market prices.
But that's always the case, not only when the executive implements new tariff policy. Predicting a recession in the next decade is like predicting a sunrise tomorrow morning.
Sure it's always the case but not everyone does it. Most personal finance advice is based on the assumption that recessions are inevitable and people should prepare for them, in this case especially if they are likely to occur within 4 years.
I'm not advising timing the market, several illustrative arguments in this thread showing how it can not pay off, especially if selling is a taxable event.
Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention
#284Earlier quoted context omitted.
With any luck (sorry), the crash happens just prior to Election Day.
Not likely. All the new jobs and lower taxes will keep it boosted for a long time.
Job growth in the US hasn't really changed considerably since the recession leveled out. It's been painfully steady.
https://data.bls.gov/timeseries/CES0000000001?output_view=ne...
Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention
#285Earlier quoted context omitted.
"If your 20 you have up to 100 years worth of investing horizons to consider. Money put to retirement really is something you can lose while young. Investing in low enough to be zero yield instruments like CD's or savings accounts is terrible advice. As is treating investment savings as actual savings you can spend." If you need the money in five years, you should not be putting it in the stock market . If the money…
Cost dollar averaging already does a fairly good job of timing the market via retirement savings. Trying to beat that is a terrible idea, as being out of the market for a few days can easily cost you a year of growth.
Having money on the sidelines is not "timing the market".
Warren Buffet has $116 billion in cash on hand.
Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention
#286Earlier quoted context omitted.
With any luck (sorry), the crash happens just prior to Election Day.
Not likely. All the new jobs and lower taxes will keep it boosted for a long time.
The tax cut is like sugar at a birthday party. It will cause a short term boom, but soon enough that stimulant will be adjusted for, and when the recession comes, the government will have less flexibility to use fiscal stimulus to restart growth.
Furthermore, to finance that tax cut, a lot of money is being borrowed. When government is out there shilling its bonds, this crowds out investment into corporate bonds and equity, depressing growth.
Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention
#287Earlier quoted context omitted.
> Productivity and wages broke lockstep in the 70s Welllll kinda. Total inflation adjusted comp has done almost nothing but go up: https://fred.stlouisfed.org/series/COMPRNFB But I think this too was a paradigm change: Wages shifted to untaxed benefits, like healthcare. At least I think that's going on.
When you plot the line absent a comparison to growth to company productivity, it loses context. https://www.epi.org/publication/understanding-the-historic-d... > There is a widespread but mistaken belief that wage stagnation has been partially caused by a shift of compensation toward benefits. Benefits have grown far less than most people realize, rising from 18.3 percent of compensation in 1979 to just 19.7 percent…
Hey, thanks very much for this. I've been seeing "rising non-salary compensation" used to explain the gap for ages, but I've never seen anyone actually use the proper comparison. Not exactly convincing with the productivity chart retained.
Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention
#288Earlier quoted context omitted.
Cost dollar averaging already does a fairly good job of timing the market via retirement savings. Trying to beat that is a terrible idea, as being out of the market for a few days can easily cost you a year of growth.
Having money on the sidelines is not "timing the market". Warren Buffet has $116 billion in cash on hand.
He is also running an insurance company that needs cash on hand. On top of that they don't issue dividends only occasional stock buybacks which means they are going to accumulate cash by default.
Re: ‘A Powerful Signal of Recessions’ Has Wall Street’s Attention
#289Earlier quoted context omitted.
Having money on the sidelines is not "timing the market". Warren Buffet has $116 billion in cash on hand.
He is also running an insurance company that needs cash on hand. On top of that they don't issue dividends only occasional stock buybacks which means they are going to accumulate cash by default.
Buffet said he would prefer to have $20Bn cash on hand, but has no good place to invest it. The reason? Companies are too expensive.
https://www.fool.com/investing/2018/03/04/warren-buffetts-11...
But sure, by your logic, he's "timing the market."