Changechecker wrote:Consumer debt is at record levels. Rates are rising, we could have an inverted yield curve as early as next year if the Fed keeps raising them. Isn't this a precursor to economic slowdown AKA recession
Yes, but you have to accept the old adage "The market can remain irrational longer than you and I can remain solvent." In other words, everything you say may be logical and technically correct. Yet the market can still do the opposite and you could still lose money.
An example: I remember hearing people say many times for decades that high interest rates are bad for precious metals. If that is true, then why did gold skyrocket to $875/oz. and silver to $50+ in early 1980- in the face of very high interest and inflation rates? You could counter by saying that the Hunt Brothers tried to corner the silver market, but that wouldn't explain the huge move in gold.
I don't really care too much if/when we go into a recession. I don't worry about what economists say because I've spoken with plenty of them in my financial career of almost 20 years- and seldom do they do very well in the stock market or manage money for others. I don't know if it is the old saying about the "paralysis of analysis" or what it is. They may be smart academically, but translating that to the stock market is another thing altogether. Much economic news is misleading or just wrong- so I've never been a huge fan of it.
Examples:
1) Inflation rates are misleading because they don't include food and energy (that's a couple big omissions).
2) Unemployment rates are misleading because they don't include people who have long since given up looking for work, yet still have the skills to be employed if someone would just give them a chance.
3) Money supply used to include an M3 measure that isn't even reported anymore and hasn't been for some time.
I feel comfortable in my ability to make money (not by doing the right trade necessarily, but by managing the risk) with pretty much any hand dealt to me. That said, I am comfortable selling short and trading options. If you are in the stock market and don't know how to make money from a market fall (not necessarily shorting- perhaps you buy a bearish ETF or trade puts), then you are missing out on a big potential opportunity. I remember saying to lots of people in 2008-09 (in the teeth of that huge collapse) that they need to learn how to take advantage of a down market. Some would say "I'll just wait until the market breaks down." By then it will be too late!! You need to develop the skill while the market is acting like it is. Otherwise, you will panic when there is really big money to be made. When the big money is staring you in the eye, you will hesitate and miss out on the opportunity. My gosh, what does it take for some people to step up once in a while!
Example: The open on Monday, August 24, 2015 when the Dow was down a whopping 1,089 points in just 5 minutes! If you had to call someone to ask for advice on what to do, you missed the boat! If you had a protective sell stop to keep your losses reasonable, it likely didn't work well (if it worked at all) that morning.
Here is a thought provoking question for everyone- let's just assume that tomorrow morning every single stock in the U.S. would be down around 20%. It would only happen briefly and then the opportunity would be gone. Assuming you've got spare cash and are looking for a bargain, what would you buy?
Expect the unexpected... and hopefully your computer monitor has an airbag built into it!!!!
Former stock broker w/ ~20 yrs. at one company. Spoke with 100k+ people and traded a lot (long, short, options, margin, extended hours, etc.).
NOTE: ANY stocks I discuss, no matter how compelling, carry risk- often
substantial. If not prepared to buy it multiple times in modest amounts without going overboard (assuming nothing really wrong with the company), you need to learn more about the market and managing risk. Also, please research covered calls (options) and selling short as well.
by 68Camaro » Wed Dec 06, 2017 6:43 pm 
