If in 3 years from now people say “nobody could have seen this coming”, I’m going to call bullsh*t.

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by cbus20122

Yield curve inversion… Check

Companies guiding downward… Check (I once had a better link towards data on this, but can’t find it)

Fed pausing hikes… Check

Initial unemployment claims breaking trend and heading higher… Check

Rest of world on brink of recessionary economic data… Check

Valuations still at very high levels (although we have seen some p/e compression)… Check (there are so many different ways to measure valuations, so do your DD to look at others. But most are still relatively high right now on traditional measurements)

Liquidity behaving poorly… Check (there are a lot of other important warnings on this that are varied, but it’s a notable issue. Only have one link here however)

Oil in contango… Check

Eurodollar futures curves inverted… Check

Credit spreads starting to rise.. Check

Cyclical industries getting hammered (housing, autos, semiconductors, broker dealers, regional banks)… Check (again, just look up charts on these industries/sectors)

Volatility breaking out… Check (just look at a vix chart…)

Market breadth performing poorly… Check

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Market leaders dethroned… Check

1/2 of US CFO’s expect a recession end of 2019, and 2/3 in Europe & over 85% in Canada… Check

Housing prices dropping internationally as well as domestically… Check

If in 3 years from now people say “nobody could have seen this coming”, I’m going to call bullshit. People get caught on the wrong side of things like this because they choose to ignore the warning signs that precede periods of growth contractions and recessions, not because they didn’t see it. Either that or they plug their ears and repeat cliches about not timing the market as if that means they can’t add any type of risk management into their investing process.

Also, keep in mind that the above completely ignores the fundamental flaws and issues in the markets that could cause problems, and also is only focusing domestically for the most part. Now, I’m not saying everyone should go out and short the market right now or anything, but ignoring the strong possibility of a recession coming around the corner would be denialism at it’s finest.

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The funny thing, is I’ve seen most posters who’ve mentioned moving any portion of their portfolios to cash this year getting downvoted heavily in here. But guess what… cash has outperformed stocks AND bonds this year. Funny how that works eh? Given, there will be a recovery (or multiple bounces) at certain points, but for each individual’s risk management, putting away some portion of their holdings to cash during higher-risk time periods is prudent and a great exercise in not being greedy and chasing bubbles.


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