Recession 2020

[The-Shoveler]

IMO you are going out on a limb if you predict there will not be a recession.

Conventional wisdom say it is time (cycles etc..).
You have to be unconventional to say there will not be one IMO.

[Coronita]

[quote=The-Shoveler]IMO you are going out on a limb if you predict there will not be a recession.

Conventional wisdom say it is time (cycles etc..).
You have to be unconventional to say there will not be one IMO.[/quote]

Not gonna try to predict one way or the other. Just gonna take advantage of any opportunities one way or the other..

So far, so good this year. Knock on wood.

Just sent in my loan payoff amount for my remaining $29k “bridge loan” I borrowed against my HELOC earlier this year to complete a property exchange, before rates creep up to 5.25%. Im back down to one outstanding loan on everything, fixed rate less, than $40k left… heh heh

Fortunately for me, funding for the entire amount came from 3 weeks of unexpected gain in AMD share price as last week selling some 1/17/2020 expiring $25 strike price AMD call option at $7.9/contract purchased at $3. Pure luck.

I’ll take it and run, not walk, to the bank. Thank you AMD short sellers that got totally short squeezed and worked over for the past 3 weeks. ha ha .

Dr Lisa Su…
MAGA: Making AMD Great Again.

lol

[FlyerInHi]

You have to predict in order to have a bias.
I expected rates to stay low so I had adjustable rate mortgages. That worked out pretty well over the last 20 years.

I expect there to be a recession during which i will buy an apartment building. I just bought a condo about $75k. On a small purchase, not that big a deal if prices drop 20% because I can make up the difference in rental income and location is important. But on a larger purchase, anticipating a recession makes a huge difference. Even today, 10 years after the 2008 crisis, we are not yet back to inflation adjusted peak.

Btw, Ray Dalio and Jim Rogers are predicting recession.

[temeculaguy]

While i won’t dispute the cyclical expectation of a recession, the fact that everyone is predicting it makes me suspicious. I also won’t dispute the winning streak of adjustable mortgages, which is why mine is fixed. Contrarian has worked more for me than trendy. I went trendy once based on advice from this site when I was poised to invest just after the crash.

https://www.piggington.com/dow_to_4000#comment-115789

read down a few comments, it’s my fault but I picked 6 stocks and everyone talked me out of it. I just checked some of them, okay three of them and I was too nauseous to keep checking. Costco at $38, it’s $244 today, Harley at $8 is $38 now. HOV was .58 and now $13, oh the humanity. But everyone said buy gold at 1200, just checked, 1300. When everyone zigs, you should zag.

BTW FLU, you win, playing the market to eliminate debt is the bomb. I would have just used my profits for hedonistic endeavors as it was a different time for me personally so perhaps I’m better off. Or I’ll just keep telling myself that so I can feel better.

[scaredyclassic]

I admit I was dumb.

I think in retrospect that I just project out my own inner mental state out onto the world, so if i feel like my own life is maybe heading for disaster, i see the potential for disaster everywhere in the world and am risk averse, and if i think things will be pretty good, i act that way too.

My wife blithely has always just dumped everything at full risk into the market in her 401k, because she’s just not worried about a damn thing, she fully accepts the ups and downs of it all, while I generally think about things as if they are all on the edge of being revealed as a giant scam and ready to implode. Of course, my wife’s course has been better.

The last few years, I have surrendered to the probability that in the long term, at least till the end of my brief flicker of life on earth, the horrible wheels of capitalism and consumption will continue to churn pretty much as they always have. I no longer believe myself qualified to offer or even hold any opinion on where we are, whether prices are “high” or “low”, or to know anything about how to live or be.

except that bicycles are the only thing that can save us.

Anyway, I apologize for being part of a chorus of people who apparently were under the impression they knew anything and talked you out of a good windfall.

[FlyerInHi]

Not everyone is predicting a recession. It feels like 2007 to me right now.

I think Janet Yellen said we won’t have any more recessions. Of course Ben Bernanke coined the Great Moderarion.

I never believed in gold. That’s 1980s thinking. Back then there was high demand and supply constraints. Since China joined WTO, we now have unlimited supply of almost everything. IMO, we are headed to a wonderful world of plenty, if only policy makers would make it happen — not let money become an artificial constraint on human productivity.

I am amazed at China’s ability to build infrastructure. They have automated the building of bridges, train tracks, etc… theoretically, we could automate almost everything and live in a world of plenty. You are very rich if you own the technology and means of production.

[Coronita]

There will always be people who think the world is ending regardless of which adminstration is in office. Some people felt the previous administration was doom and gloom. Some people probably feel the same thing with this one too. Imho, just about the worst thing one could.do is make significant financals decisions based on your feelings toward the imcumbent government.. Been there done that ….AN talked some.sense into me about that..

In the past, every time I try to fck with my passive investments, it always ended up doing worse in the long term than if I left it alone. The 4 main categories of account I have are 529k,401k, After tax Vanguard index fund basket, and a self managed trading account. And their performance over a long period of time has always been from best to worst in that order.. simply because those accounts are in the order of difficulty to fck around with.

The 529k account is the most restrictive because you can only elect changes to your investments twice per year and you are limited severely by the types of funds you can invest in. Since 2006, it’s been the best performing account for me for that reason. The 401k accounts would have been better (due to the lower fee structure) if I didn’t generally fvk with it too by trying to time the market and trying to borrow against it when I didn’t need to.. I thought it would be good to take some money off the table, and a self loan wuth 4% interest paid to myself sounded like a great idea….Certainly it would be better than leaving it in that Fidelity Contrafund longer to get that extra 27% gain….doh …. And the after tax vanguard account has an issue simply that capital gains distributions can’t compound as well as all those other account types, though some index funds Vanguard offers a more tax efficient flavor (tax managed small cap, mid cap, etc)… The self trading accounts are hit or miss. short term fine, long term not so fine…

I’ve just got use to deferring $7000 each month between my 401k, 529k, after tax vanguard account, and leave my speculation account on life support to no longer feed that gambling addiction lol… That deferral was much higher before, but I’m sorry, I like to enjoy life more these days. I always max out my 401k to get whatever matching there is… if any… And lately I’ve been putting a lot more in the 529k versus the after tax vanguard, simply because of the new tax law changes for the 529k. Theoretically you can contribute I think up to $500k to one 529k…and distributing it shouldn’t be a problem for me since you can use it now for K-12 private schools , which my pedigreed raised nieces and nephews are attending anyway… I figure I can get a lot more capital gains tax free versus a traditional after tax index account… and the funds are basically the same…

Don’t fk around with your 401k/529k/or passive index funds….Just do that biweekly or monthly automatic deposit, and forget about it.

[FlyerInHi]

I subscribe to the Homepath emails. 10 years after the Great Recession, Fannie Mae is still foreclosing on people who bought at the peak.

https://www.homepath.com/

[FlyerInHi]

So much for for people who predicted runaway inflation from budget deficits. They were all over the airwaves complaining about the stimulus package that got us out of recession. That was especially true of Ron Paul type supporters who want a return to the gold standard. No calls to audit the Federal Reserve coming from them lately.

Kudlow: Fed may not hike interest rates ‘in my lifetime’
https://www.politico.com/story/2019/04/11/larry-kudlow-interest-rates-1269762

[Coronita]

for reference..

https://investor.vanguard.com/mutual-funds/profile/performance/VSMAX

https://investor.vanguard.com/mutual-funds/profile/performance/vimax

https://investor.vanguard.com/mutual-funds/profile/performance/vlcax

pretty damn convincing to have a slow small investment drip regularly contribution plan over a long period of time.

For most people trying to go for the big bang one time hat trick investment approach, you will give up a lot of opportunity in between with your ill-timing…. If you really could beat the long term returns consistently with a meaningful sized amount of money, you would be running a hedge fund, imho.

[FlyerInHi]

Drip drip into an investment account does not give you the full return shown on the chart since your investment drips in over time.

I will leave stocks to people who know more. Sure diversification is important, but I can make more in real estate. By managing my own real estate, I get cash flow and appreciation. Timing is much more important with real estate. Real estate is a leveraged business so when recession hits, many Investors have to liquidate. I never bought high and don’t ever intend to.

[temeculaguy]

Scardey, no need to apologize, I only used the example as a historical reference. Everything happens for a reason. Had I lucked into a windfall I would have squandered it. Keep in mind I was a 40 year old divorced guy, I wouldn’t have paid off my house I would have bought some exotic car, found a gold digger for wife #2 and been on these boards looking to make up for poor decisions once again. Because I pussed out, I found a wonderful, reasonable, low maintenance wife who insisted on a pre-nup so my kids would not resent her as an inheritance thief. A decade later, my wife is still the same person I met and I’ll never have to donate real estate again or find another wife. So you did me a favor, because I do not believe I was mentally equipped to handle that money at the time. Once again, everything happens for a reason, and I chose to take that advice so it’s on me and any regrets are in jest, I’m grateful for how life turned out. I did like your self actualization on your wife and how her strategy is likely better. Even Brian admitted others are better at this, thus his endorsement of mutual funds. I like these new admissions.

FLU, spot on once again. Leaving alone retirement funds is fantastic advice, my experience in the investments I’ve left passive have been the most successful, furthering my understanding as I age that my emotions are my greatest enemy. When I enter a casino and play 3 card poker, I win more at 3 card poker when I play “blind.” Furthering my theory that emotion and money should be kept separate, not that casinos are a good investment. I only say this because I have to attend a wedding in vegas soon and I’ve decided I’m not playing any games of skill while there, especially given my proclivity to partake in the free beverages on offer there. It took 50 years to learn my faults, but at least I learned them.

[Coronita]

I don’t know.. but it certainly feels like we are on the cusp of run-up in the stock market, led once again by tech companies, similar to 1999-2000… I say this because I see the same games tech/media companies playing now that tech companies played back then…a lot of them are running, not walking to Wall Street investment bankers to slam through the IPO floodgates while the going is good…Lyft and Uber are just the beginning … Pinterest just filed, IHeartMedia just filled.
AirBnb and Slack probably will file. Maybe Vbro, Robinhood, WeWork….

I also see a bunch of companies using the next set of buzzwords to go public or get involved with M&A : “AI” and “Analytics” and “Cloud” …
PagerDuty leads this IPO marching band. And they killed it in their debut.
https://markets.businessinsider.com/news/stocks/initial-public-offering-pagerduty-tech-unicorn-nyse-2019-4-1028104039

My current private company rebranded all it’s work under those glorified buzzwords in its attempt to secure more funding from VCs..
My colleague’s company, Sumo Logic looks like they are aligning to go the IPO route too…$230 million funded , on Series F (late stage ) , with the typical high profile VC backers: Sequoia Capital, Accel , Grey Lock Partners, etc

List is growing …

https://www.nasdaq.com/markets/ipos/activity.aspx?tab=upcoming

https://www.nasdaq.com/markets/ipos/activity.aspx?tab=filings

The way I look at is, the folks that are involved the go-no-go decisions on these blockbuster IPOs are not stupid… They aren’t going to file to launch if they think the market conditions are bad…. And everyone involved in IPO , including the underwriters, all have a vested interest to launch at the best time that all their analysts, researchers, etc think it is…Because there is a shitload of money involved in this …From banking underwriting fees, to corporate insiders and early investors that want to cash in… You can say one company filing for an IPO as a fluke and doesn’t suggest anything, but when you see many high profile companies reaching the same conclusion and doing the exact same thing, that’s not a coincidence.. it’s no different than all these big REITs building a shitload of rental homes in SD anticipating a sharp demand for rentals, like we see now…Someone(s) with a lot of money spent a lot of money and time analyzing and figured out now was a “good enough” time to do economic activity X.

So, follow the unicorns..And there’s more unicorns to come ….And many of them arent profitable , but who cares…. neither is Lyft or Uber…Once the initial higher quality IPOs launches you’ll see a followup of IPOs from less-than-stellar companies, followed by bunch of extremely shitty companies getting on the bandwagon. Using an old motto from old school IPO days, “…it’s all about the revenue and subscriber growth…The greater the loss, the more glorious it is….”

But hey, there will always be retailer stock buyers that insists on making insiders instant millionaires by buying shares post-IPO while pre-IPO insidersof all size and shape desperately dump as many vested shares possible once any sort of lockup period expires…so that those unicorn capital gains achieved by insiders can be put into more predictable/stable investments for the long haul..such as CDs and a basket of Vanguard index funds….lol…

[FlyerInHi]

1999-2000 was followed by the dot com bust. So my prediction may yet come true. We shall see.

[FlyerInHi]

If you know that rates will be low, you should keep maximum adjustable rate mortgages and invest the money in higher yield ventures.

I predict that interest rate will remain low for a long time. In that regard, Larry Kudlow may be right.

Hidden Bond Market Dangers Expose Traders to $2 Trillion Wipeout
Ultra-low bond yields and reduced liquidity could blindside investors and exacerbate losses once the market turns.
https://www.bloomberg.com/news/articles/2019-04-12/hidden-bond-market-dangers-expose-traders-to-2-trillion-wipeout

So the Fed has been unwinding its balance sheet, but it looks like, later this year, they will pause the unwind and start buying mortgage securities again. Does the Fed know something we don’t? And can we trust the Fed to steer us away from recession?

I hear of lot of people saying that the Fed is clueless, while at the same time, they trust the Fed will lower rates to keep the economy going.

The twist is that strategists predict that sometime after October the central bank will reach a turning point, when it will need to start increasing its assets again. It would need to do that to prevent bank reserves from declining so far that funding markets become disrupted.

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