Recession

[Guest MormonGator]

Is anyone else afraid that the recession is coming back? Or that it never really left in the first place? 

[NeuroTypical]

Recessions happen - it's part of a natural, healthy economic cycle. 

 

But I have no clue if we're about to have one.  These things only make sense to me looking backwards at charts.

[Guest MormonGator]

Good point. I know they happen but I'm still worried about it. 2008 was a nightmare for so much of us. I know the boom and bust are natural events (I'm a Hayek/Von Mises guy, but certainly no expert on the economy) but it's still not fun to go into a bear market. 

 

And you are so right about backwards thinking. Everyone is genius with hindsight. 

[notquiteperfect]

Read "The Harbinger" and/or "The Mystery of the Shemitah" by Jonathan Cahn

Edited November 24, 2014 by notquiteperfect

[PolarVortex]

Best defense I've found against recessions: diversify your portfolio and rebalance, rebalance, rebalance every year.  I'm also a big fan of tangible assets, especially real estate. 

 

But I did blunder badly in the 1980s with tangible assets.  I bought my grandfather's stamp collection from my grandmother.  My grandfather had thousands of pristine stamps from the period 1910-1945, and I figured they would only appreciate over the years.  I finally got them appraised and was horrified to learn that they had actually dropped in value.  The dealer claimed that the Internet had totally disrupted the rare-coin and stamp business and turned it into a frictionless market where buyers and sellers could connect about 1000 times more easily than in pre-Internet days.  On the other hand, I read that an original Apple computer will now sell for about $600K.  Who knew?  

[yjacket]

I'm a very big Mises, Rothbard guy (I've read Man,Economy State for example).  Interestingly enough it was what I learned in that book that convinced me of being a libertarian.

 

I disagree that recessions are a natural, healthy part of life.  Recessions are the correction that occurs to clear out all the malinvestment that occurred during the unnatural boom phase.  The business cycle is artificially created as a side-effect of governments attempting to control an economy.  Natural recessions occur due to things like drought, earthquakes, etc.

 

But since we aren't getting rid of the Fed any time soon, the key to navigating the booms and busts are to determine which sectors will boom and which ones will bust.  In 96' the Fed pumped money that created the dot-com bubble. '01 pumping created the housing bubble, the '08 pumping created the current stock bubble and IMO the bond bubble.

 

When will it crash, hu knows.  Generally speaking the greatest indicator of a recession is the yield curve, when the 2 year bond is at a higher interest rate than the 5 year you know something wicked this way comes.  Now with the Fed pegging rates @ 0 it remains to be seen if that is still a reliable indicator.

 

My bets on the sectors that will crash, the bond market and to a certain extent the stock market.  Bonds are in a 30+ year bull market, the longest bond bull market in the history of the US, it won't last forever.

 

I 2nd polarvortex.  Most people's biggest concern with wealth should be inflation and how to protect against it.  The best way to do that is through tangible assets, my favorites are gold & silver.  Real estate can be okay, but there are extremely high holding costs and transaction costs associated with it and it's not a very liquid asset.

[Palerider]

I have never felt we got out of the one.....I do wonder if it's going to get worse

[Guest MormonGator]

Business Insider is reporting that hedge funds are closing at a rate not seen since 2009. This is frightening. 

[Traveler]

Recessions happen - it's part of a natural, healthy economic cycle. 

 

But I have no clue if we're about to have one.  These things only make sense to me looking backwards at charts.

 

No it isn't.  Recessions are carefully crafted indications of sinister elements in our economy, politics and society.  Very few have paid attention - the great depression resulted in a change of 90% of US farm land owned by individual families to 90% of farm land owned by banks.  Our last little recession ended all individual and private ownership of banks being taken over by and completely controlled a few select super massive global banks.   I would point out that these losses of wealth in both cases (the depression and recent recession) have taken wealth from what is termed as middle or upper middle class to a very small few of the very super rich.  The belief that such is a natural course or a just economic cycle - only enable the evil conspiracy to boldly and ruthlessly take more.