Is a recession coming? Sell stocks? (2 Viewers)

Darson

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A buddy of mine was a hedge fund manager and he saw the writing on the wall in 2007 and sold out his entire personal portfolio before the crash in 2008. He came back into the market to ride the recovery. He's retired now (at age 44) and I met him for a poker game last month in London and we got a good chance to chat while the other players arrived. He told me that he just sold his entire portfolio and is holding on to cash. He said that there may be a max of 10% upside left in the market before there will be a crash.

His view may be a European/British-centric and also protecting his assets since he's retired but markets are global and the trends spread. I'm debating whether I should move my money out of the market. I lost 5% on Monday and while it's recovered some, the signs are of continued trade challenges and a slowing Chinese economy which will in turn impact the US economy. China is the US's biggest trading partner and Europe is already depressed and Brexit will definitely make it worse. The inverted bond yield shows the signs that the market is already pricing in short term depression.

Sell?

I'm also toying with the idea of moving a chunk of my 401k savings into bonds (from 10% of my holdings to 20%).
 
I will give you my opinion. I dislike the market as an investment vehicle in general. You have no control over how your investment does. I won't go into detail here but suffice to say fund managers do not have their interests aligned with their customers. Fund managers still make money even when their customers lose money. In other words most fund managers don't have skin in the game which is a red flag.

Real Estate and owning a business (or part of a business) is the way to go. Owning stock is not the same as having direct investment with a business. Partial ownership will return a profit directly based on the companies' bottom line. Stock value goes up and down based on what is essentially a popularity contest.

If you anticipate a bad economy coming up (which I do) then gold or bitcoin can be good options. Even holding cash is still exposing you to the fluctuations of that national currency. China's economy is not slowing down at all. The problem is the trade war between the US/China.

I am definitely concerned abut the US economy with their high debt load and lack of production. I think we basically put a band aid on things after 2008 and the major problems with the US economy remain.
 
The market is intrinsically cyclical and the economy has been riding a good wave for a while with some leading indicators pointing toward a recession possible about 18 (12-24) months away. I no longer work in finance, but my friends and the analysts at their firms believe that a significant downtown is likely. How long and deep of a downturn are more difficult and elusive questions to answer.

I wouldn’t necesaroly liquidate your portfolio, but I wouldn’t recommend buying a shirt to medium term house right now either.
 
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A recession is always coming. So is a bull. I'm not good at predicting which. I'm still a stock buyer so I'll ride the way and buy all the way down. I don't stack gold or silver but i do stack heavily in other metals including brass, copper and lead. I'm a long way from retirement and my kids are aways off from college. So i'll have 10+ years to recover from even a bad recession.
 
I guess it depends on how close you are to retirement, for starters.

I’m 29 and subscribe to the Dave Ramsey philosophy (on most concepts, anyway). So I’m willing to accept the ebbs and flows of the market as I continue to steadily invest a fixed percentage of my income. But then again I have 30-40 years of investing left to do.

I don’t believe in attempting to time the market, as a general rule. But I am far from a financial planner.
 
time in the market beats timing that market. stop trying to be warren buffet and keep investing every month and every month after that.

That's the conventional wisdom and it is good advice if your investment horizon is long enough.

Having said that, I am in my early 60s and I got out earlier late last year because I thought the guy running the country is so unpredictable that things could turn south overnight.
 
That's the conventional wisdom and it is good advice if your investment horizon is long enough.

Having said that, I am in my early 60s and I got out earlier late last year because I thought the guy running the country is so unpredictable that things could turn south overnight.

In other words, he is predictable.
 
A recession looks likely, but it’s an exercise in futility to try and time it. Plenty of people guess, some guess right, some guess wrong. It was just as reasonable to get out around 2016 fearing a correction, and then look where you’d be. Even that guy from the Big Short almost went under while making the right bet, just because he had the timing off.

I think a more reasonable strategy would be to manage your risk/return by age/financial needs, and gradually shift fund towards safer (but less profitable) bonds as you get closer to retirement window.
 
Interesting responses! I must start by saying that I have a well diversified portfolio so stocks aren't my only investment - in fact, they're my smallest asset class - so this is not an all or nothing decision and if I get it wrong, it's not going to be devastating. I note that Warren Buffet has been selling and holding cash.

One thing that is vastly different this time is that global interest rates are so low there is no safe alternative place to stick your cash. So maybe there will be a recession but it may not lead to a big sell-off in the market as there's nowhere else to put your money. The market has been yoyoing a lot in the last couple of years with lots of ups and downs but not a sustained down. Maybe best just to stay in and ignore the volatility.
 
Start stockpiling food and long-term consumables, put together a Bug Out Bag.
Keep a good supply of First-Aid & Medical Supplies on Hand.
Start Stocking up on Survival Knowledge.
Take a serious look at your Self-Defense.

41qA7H%2BvVvL._SX331_BO1,204,203,200_.jpg




:)
 
I know your house market is not the same...but real estate is the best investing option over here.
Steady 6-10% increase every year, no risk.

My mortgage is @0% and paid off before i'm 45
100% health coverage for all & decent pension funds

I hope to quit when I'm 50
 
There are a few people who can and do accurately time the market. I can't do it, perhaps someone else here can. I believe in a widely diversified approach with little active investing beyond an annual rebalance between asset classes. There is little need to pay for professional management - a minimal fee general market based investment works well for me. Very few investment managers can out perform the market well enough to cover their costs.

What I can evaluate is my apatite for risk vs my need for security. Someone with decades of time horizon before money is needed can prudently ignore market fluctuations. On the other hand, people who can foresee the need for money in the next few years, say a just entering college student, should not be taking the risk no matter how good they feel about the market.

Retired people need to take on more risk than they might think. Someone sixty years old is a solid favorite to live past eighty unless they have specific medical knowledge. Moving the nest egg to a "safe, zero percent rate of return" asset is leaving a lot of money on the table. Money that most retirees would find a good use for.

DrStrange
 
I lost everything I had back in 2012 (180K of savings in Greek Government bonds) when my country went bankrupt.

Foreign banks were given back something; Greek citizens, having trusted their own Government got back bonds of way less than half the value, terminating in 2042, when every natural person would be dead.
I had thought, naively, that banks go bankrupt before the Government does (it was proved that this is only true of the Superpower, though, namely, the US Government).

Real estate here was badly depreciated, through a communist-stalinist policy of taxing everything, regardless ot it producing any income or not (basically, confiscation - and, interestingly, encouraged by the scoundrels of the European Commission), including un-rented appartments and un-used acres of land. Real estate rapidly turned from asset to liability.

My only asset to keep some good value was the one in my garage (911 Carrera GTS):(
I had given a good deal of my honest hard-earned money - mostly abroad-, through the latter purchase, to the German economy, only to be called a corrupt and lazy sub-human by the German gutter Press (Bild Zeitung having nothing to envy from the historical Volkischer Beobachter).

The morale of the story may be: keep moderate amounts of money in banks, or as prestige cars and poker chips; for the rest, keep them in gold bars or in US Treasury Bonds. The US will never go bankrupt, unlike any other nation on Earth.
 
Yes there's downturn ahead and then there will be an upturn ahead. Trying to time it gets you in trouble fast. A steady monthly investment in the overall market over 40 years will prob get you there. And hopefully, the market won't completely collapse just before you need it
 
The morale of the story may be: keep moderate amounts of money in banks, or as prestige cars and poker chips; for the rest, keep them in gold bars or in US Treasury Bonds. The US will never go bankrupt, unlike any other nation on Earth.

Well....the day China stops buying US debt....
 
I know your house market is not the same...but real estate is the best investing option over here.
Steady 6-10% increase every year, no risk.

My mortgage is @0% and paid off before i'm 45
100% health coverage for all & decent pension funds

I hope to quit when I'm 50
I'm bought my first house 5 years ago for $325k, it went up to $400k when it was finally built 2 years later, and now about 3 years later is worth $280k. Lame
 
Well....the day China stops buying US debt....
Risking nuclear warfare? :D

On a more practical note, would you buy my 911?
I bought it while working in Brussels (from Germany, though).
It has been driven on historical tarmac, including the one at Spa-Francorchamps:):)
 
A buddy of mine was a hedge fund manager and he saw the writing on the wall in 2007 and sold out his entire personal portfolio before the crash in 2008. He came back into the market to ride the recovery. He's retired now (at age 44) and I met him for a poker game last month in London and we got a good chance to chat while the other players arrived. He told me that he just sold his entire portfolio and is holding on to cash. He said that there may be a max of 10% upside left in the market before there will be a crash.

His view may be a European/British-centric and also protecting his assets since he's retired but markets are global and the trends spread. I'm debating whether I should move my money out of the market. I lost 5% on Monday and while it's recovered some, the signs are of continued trade challenges and a slowing Chinese economy which will in turn impact the US economy. China is the US's biggest trading partner and Europe is already depressed and Brexit will definitely make it worse. The inverted bond yield shows the signs that the market is already pricing in short term depression.

Sell?

I'm also toying with the idea of moving a chunk of my 401k savings into bonds (from 10% of my holdings to 20%).

This post confuses me. Why would he not buy up a ton of puts like the rest of the hedge fund managers in 2007? The point of a hedge fund is to aggressively push gains. His strategy was cash? Seems fishy to me. Okay, he's retired and it was his personal accounts. I would still shrug, whatever. Do you know his fund's AUM? My opinion is that holding large M1 shows uncertainty. Meaning you FEEL your current holdings might decrease in value or remain constant. It does NOT show confidence, bullish or bearish, or expertise.

Would you not expect Brexit to be currently priced into the market? It's not like it is going to be a big surprise, just saying.

Don't mind me, I'm just here plotting how to maximize gains when fearful, panicky people start to sell. Then I'll be looking long for the biggest discounts; just like last time.
 
This post confuses me. Why would he not buy up a ton of puts like the rest of the hedge fund managers in 2007? The point of a hedge fund is to aggressively push gains. His strategy was cash? Seems fishy to me. Okay, he's retired and it was his personal accounts. I would still shrug, whatever. Do you know his fund's AUM? My opinion is that holding large M1 shows uncertainty. Meaning you FEEL your current holdings might decrease in value or remain constant. It does NOT show confidence, bullish or bearish, or expertise.

Would you not expect Brexit to be currently priced into the market? It's not like it is going to be a big surprise, just saying.

Don't mind me, I'm just here plotting how to maximize gains when fearful, panicky people start to sell. Then I'll be looking long for the biggest discounts; just like last time.

Was this a mic drop?
 
The "Fed" is the World's only Central money-printing Bank that can turn toilet paper into currency, by corresponding that currency to other peoples' commodities.
That's why poor Americans, (as soldiers), are called upon to kill other people on a number of occasions (I would do roughly the same in their shoes).
You can't possibly rule the world without ever killing anybody. :)
 

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