Beware...it's coming

[Bubba]

So, since I really like this community, I'm sending out a note to beware that the "uninversion/deinversion" is happening. Over the past 40 years, whenever this process completes, usually within a few months we have a recession. Naturally we could end up with an 80s style event where there is a recession, but it's super shallow (a.k.a. soft landing) or we end up with a hard landing. Personally I'm assuming we'll get a hard landing...but that's entirely up for debate.

If you want to look at the numbers yourself, look here https://fred.stlouisfed.org/series/T10Y3M. Oh and the reason I use the 3M and not 2YR is because the original researcher that discovered this relationship (Harvey Campbell) said that all of the types (1YR, 2YR, etc.) are more likely to give false signals. He said the only reliable one was the 3M.

Naturally you can disagree or think this time's different. It might be, no one truly knows. Having said that, historically, this situation typically precedes a recession. You do you...

P.S. I attached a 100 year chart of the 3M vs 10 YR for your enjoyment. Enjoy!

[bloobs]

Thanks for the data Bubba.

For me, I can guarantee that a recession is coming next. But I can also guarantee that boom times will follow that.... and so on the cycle continues..... The only unknowns are frequency (x-axis) and amplitude (y-axis). Those would be different each time.

[evilanne]

It sort of feels like we are already in a recession

[Tomanyiron]

I think you have to be ready for anything. I wounder if it could end up being a self-fulfilling prophecy?
The stock market is a skittish place. The C fund is up over 12% this year. Why are so many of us under that?

[mrwawa]

So how is the coming recession going to affect your investing strategy? I agree there are worrying signs, but whenever I have tried to time the market, I have lost money. Currently I follow a seasonal investing strategy. A little off topic, but how does a recession affect seasonal investing? For the TSP indices, not a lot lof data on how seasonal investing performs during recessions, as far as I know.

[bloobs]

So how is the coming recession going to affect your investing strategy? I agree there are worrying signs, but whenever I have tried to time the market, I have lost money. Currently I follow a seasonal investing strategy. A little off topic, but how does a recession affect seasonal investing? For the TSP indices, not a lot lof data on how seasonal investing performs during recessions, as far as I know.

Actually the data is all there, at least for the C S I and F indicesand equivalents for almost 2 decade. What's not °
all there: verifiable or repeatable, hence predictive insight derived from all that data.

Sure a bunch of talking heads have claimed to do their analysis but most of these folks really don't know what they're doing and/or have hidden agendas that benefit them at our expense. Some of us are DIY analysts here including me and I can tell you for a fact that none of our methods are as good as we hope. The biggest pitfall of DIY analysis is our incessant need to inject many types of biases into our analysis--nullifying the dataset we use. Those will always be D.O.A.

[Bubba]

So how is the coming recession going to affect your investing strategy? I agree there are worrying signs, but whenever I have tried to time the market, I have lost money. Currently I follow a seasonal investing strategy. A little off topic, but how does a recession affect seasonal investing? For the TSP indices, not a lot lof data on how seasonal investing performs during recessions, as far as I know.

Excellent question. I've been wondering this myself too. For the most part, you can see how they worked in 2007/8, 2018, 2020 and 2022. We don't know 2000 to 2003, which I think is a pretty important period. Also, this period is one of the first with very high inflation (in reference to the seasonal strategies), so it's hard to really see what will happen.

I initially had a full plan for the year, but I've become a bit unhappy with losing here and there so I've really been honing in on using strategies with very low SDs (8 or less). Right now I've made a compilation of different strategies that provide an SD of 7.4 and CAGR of 30.55 from 2004 to 2022. I didn't include 2023 because the year is still "young" (even if many strategies begin converging from this point on until the end of the year).

Long ramble for saying..."the jury's still out."

[IRQVET]

Comedian Katt Williams- "I don't think I should be standing at the gas pump making life decisions."