Most modern recessions are caused by investor fear and panic. In March 2020, if Elizabeth Warren gets the democratic nomination, you can expect a medium to deep recession caused by her high tax plan and business-hostile policies. You can gauge this by the high number of put option contracts with March expiration being purchased, compared to all other months.
Predicting Next Recession
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Re: Predicting Next Recession
#42During the height of the bitcoin bubble I had my gym coach leave job and become "crypto investor" ... Katy Perry changed her nails to each look like one of the popular coins. And yes I did have an uber driver talk to me about crypto. The mainstream media were shilling Ripple at its highest price ever. Today, all the same people talk about coming recession. I was lucky to have my first job in finance during the credit…
My hypothesis is that we are experiencing high inflation and that's the recession. And before anyone says "fed reserve 2 percent", the federal reserve is known to lie.
Yes, we might finally be seeing all that QE cash trickle down to the street. First it reinflated stocks and real estate after the deflationary 2008 crash, and now its flowing into other prices.
Re: Predicting Next Recession
#43There's not enough discussion about the eventual recovery in all these recession articles. I was looking at the last 2008 recession and found some interesting gems. For example, if you bought AIG, one of the main causes of the financial crisis, you would've made out like a bandit during the recovery period. Definitely too big to fail.
Here's all the data on how stocks performed during and after the last recession: https://shan.io/writing/learnings-from-the-2008-great-recess...
Re: Predicting Next Recession
#44Around the last recession, I had this distinct feeling: that this exuberance is a little too irrational. The press was constantly talking about how great the economy was, and people I knew around me were splurging on things they could in no way afford. I used to trade domain names at that time, mostly to fund my college. Everyone in my industry was talking about how the value of certain domains will 10x in the next 5…
Yeah I think that too. Everyone else too! No way a recession is coming!!!
... ... Opps : recession. ;-) it's a paradox
Re: Predicting Next Recession
#45Given how poorly most people are able to predict these things, I'm going to go out on a limb and say the next recession will happen when everyone is overly bullish on the economy. The amount of scepticism today combined with the actual economic data lead me to believe things will be OK for a while yet.
Re: Predicting Next Recession
#46These metrics are totally meaningless. If some metric claims that there is a 50% chance of recession in the next 12 months, I'd expect it to be right roughly half the time it makes that confident a claim. Similarly, I'd expect a recession one third of the time that the metric says 33%.
The year leading into the Great Recession was mostly around 36%. One year before the 2001 recession it was 24%. And then we have spikes around > 40% in 1999, 2002, 2003, 2006, 2016, and 2018, none of which "paid off".
So how are we supposed to interpret these numbers? That a 40% chance of a recession has a 15% chance of actually predicting a recession?
Re: Predicting Next Recession
#47During the height of the bitcoin bubble I had my gym coach leave job and become "crypto investor" ... Katy Perry changed her nails to each look like one of the popular coins. And yes I did have an uber driver talk to me about crypto. The mainstream media were shilling Ripple at its highest price ever. Today, all the same people talk about coming recession. I was lucky to have my first job in finance during the credit…
It's hard to imagine a stock market crash coming when everyone already expects it, but it's quite easy to imagine a recession coming when everyone expects it. If people expect stocks to crash, then the expected "crash" is probably already priced in. If people expect a recession, then the reduction in economic activity is something of a self-fulfilling prophecy.
I think many who expect a recession have been expecting one for years. They have been watching from the sidelines as the market passed them by.
That's why the fear of losing out dominates everything else right now and every mini correction gets bought - until something unexpected happens.
Re: Predicting Next Recession
#48During the height of the bitcoin bubble I had my gym coach leave job and become "crypto investor" ... Katy Perry changed her nails to each look like one of the popular coins. And yes I did have an uber driver talk to me about crypto. The mainstream media were shilling Ripple at its highest price ever. Today, all the same people talk about coming recession. I was lucky to have my first job in finance during the credit…
I agree with you for most part but remember dead clock is right at least twice a day.
Re: Predicting Next Recession
#49What's in the author's portfolio will really tell you what they think about the next proximity of the next recession.
“Don’t tell me what you think. tell me what’s in your portfolio”
Re: Predicting Next Recession
#50During the height of the bitcoin bubble I had my gym coach leave job and become "crypto investor" ... Katy Perry changed her nails to each look like one of the popular coins. And yes I did have an uber driver talk to me about crypto. The mainstream media were shilling Ripple at its highest price ever. Today, all the same people talk about coming recession. I was lucky to have my first job in finance during the credit…
>It's hard to imagine recession come when everyone expects it. Especially when those in power are doing everything they can to prevent it. The Federal reserve has a trading floor and participates as a proxy for the government in the markets. There is also the rumored Plunge Protection Team. We actually have markets pricing in the likelihood of further quantitative easing 11 years after it was first done to address a…
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