I Told You So
I don’t want to say i told you so .... but here is my article from may https://www.raic.com.au/post/hello-raic-com-au where i started ringing the bell of recession warning signs, (this was also about the time my friends stopped inviting me to dinner parties as once i am on a topic i do tend to get up on my soap box with a sign around my neck trying to get people to listen to me) ... Oh, And i told you so 😉
The last thing i want to do is to instill panic in anyone so let me start this by showing you a little math:
RECESSION = OPPORTUNITY
If you want to see where "overnight" millionaires are made do some research on companies and individuals who heading into a recession are relatively nobody and come through the financial fires like a phoenix rising from the ashes.
Yes, this is profiting from others losses, that is how easy opportunity works, buy things that are undervalued and increase the value by either improvement or patience.
What you need to do is make sure that you are not one of the people that are losing and i find the easiest way to stay ahead of potential threats is to pay attention to the whole picture and look at history, "All of this has happened before. And all of this will happen again" (yes i did just quote Battle Star Galactica 😛). In my may 2019 blog post "Doomsday - Then the day after" i spoke about the history of the short term 1 to 10 year bond yields and that an inverted curve over two consecutive quarters is an indication that a recession is very likely as the last 9 time that it has inverted in that manner since 1962 8 times the USA has had a recession. In my opinion those are some tough odds to bet against!
What happened yesterday is we saw the 10 year US treasury bonds invert, this is the first time that has happened since 2007.
I do not offer advice when i write these articles and what i speak about is my opinion only and you should talk to your advisers before making any financial decisions.
What i would suggest is educating yourself, do not take people's word at face value, there is so much historical data available to you, we are in the age of hand terminal (mobile phones) and the internet, there is no excuse for not being aware of the world around you and if you are investing in any way you need to take the time to keep abreast of what is happening in the world, even if it is 15 minutes on the bus or 5 minutes on the toilet, read the news and then research the things you don't understand (I'm not naturally a clever person, however I am a very curious one)
I would highly suggest talking with your advisors about the current state of your portfolios if you have money in the markets, there is a small window in which you can still get away from some of the more at risk stocks, however there will be a point where the drop in value would mean it would be better to hold or even double down (again this is not advice there are far smarter people than I you should talk to, especially since I have made no secret of the fact that I prefer active secure investments over numbers on a computer screen haha ) #littledig
Please be careful, be educated, be prepared