Recession coming?

[+ JEC]

This is an existential question I know, do others think the market is peaking?   Are we on the verge of a recession? 

With gas prices soaring, ongoing supply chain issues, and potential for war on the horizon.....

Are you moving into more conservative positions?

I am invested in mostly aggressive (but diversified) funds.   Thinking of moving to a more conservative position for a bit.   I'm 58 and planning to retire at 65. 

Welcome your thoughts.....

[Kevin Slater]

One could argue that you should take some money off the table if you're eight years away from retirement; the traditional models would have you move more into bonds at that stage.  Add your fears of a recession, and it sounds like the move might help you sleep at night.  I've seen a few articles suggesting that the market doesn't fare particularly poorly during recessions, if that matters to you.  Personally, I've never been anything but 100% aggressive.  I've certainly taken hits, but from higher positions than I would have been otherwise, so where I land is still ahead of the game. 

Kevin Slater

[+ FrankR]

58 minutes ago, Kevin Slater said:

One could argue that you should take some money off the table if you're eight years away from retirement; the traditional models would have you move more into bonds at that stage.  Add your fears of a recession, and it sounds like the move might help you sleep at night.  I've seen a few articles suggesting that the market doesn't fare particularly poorly during recessions, if that matters to you.  Personally, I've never been anything but 100% aggressive.  I've certainly taken hits, but from higher positions than I would have been otherwise, so where I land is still ahead of the game. 

Kevin Slater

My portfolio suffers from a severe case of "the aggressives" too!

[+ FrankR]

5 hours ago, JEC said:

This is an existential question I know, do others think the market is peaking?   Are we on the verge of a recession? 

With gas prices soaring, ongoing supply chain issues, and potential for war on the horizon.....

Are you moving into more conservative positions?

I am invested in mostly aggressive (but diversified) funds.   Thinking of moving to a more conservative position for a bit.   I'm 58 and planning to retire at 65. 

Welcome your thoughts.....

I understand why you are thinking about this.  There are a lot of moving parts - some you can control (like your retirement date and when to start taking social security) and others you cannot...like the expected inflation and a potential war.  Even the affluent appears to be scaling back, if you believe the numbers.  I do expect a recession may be coming, but I won't be so bold as to predict when. 

You may find this article of interest: https://www.forbes.com/sites/robertberger/2020/08/02/the-bucket-strategy-is-broken-heres-a-better-way/?sh=68c0515d1b33

If holding more bonds or even cash makes you feel more comfortable and sleep better - do it.  But opt for TIPS instead of vanilla bonds given your target time period and potential need to bridge the gap between retirement and taking social security. 

There are some really good fiduciary/fee only financial advisors that can help you craft a plan that works for you - personal finance is very personal and finding somebody to help you work through it can be very useful. 

I am not a registered investment advisor - by my approach has always been to lean quite heavily on stocks; they have a good track record during inflationary times.  As long as you are willing to ride out the ups and downs.   

 

[pubic_assistance]

When investing you merely need to be mindful of the components driving the market and who the winners and losers may be.

RIGHT NOW we are seeing a return of the Aristocracy.  In spite of all you well meaning lefties....your senile old state puppet, Uncle Joe is reigning over the greatest wealth re-distribution this country has seen since the Civil War...and it ain't being distributed to the underprivileged black single moms ( who they claim to love and cherish and "care" about" ) but it is floating to the TOP .... those people who ACTUALLY own and control Washington DC and whomever sits in the Oval Office ( except Trump who wasn't playing).

LUXURY industries are making BANK.

Commodities are struggling. Middle class is now the lower class.

Upper Class millionaires are now billionaires.

People are spending on a purse more than most people make in a year.

Moderator's note:  We really want to keep politics out of this forum.  Yes, government action does impact the nation's economy and an analysis thereof is relevant, but partisan pontificating and name-calling belong in the politics forum, not here.

[BSR]

5 minutes ago, pubic_assistance said:

People are spending on a purse more than most people make in a year.

Hermès Birkin bags sell from $40,000 to $500,000.  Millions of Americans, especially in the ever expanding service sector, don't even make $40K, forget $500K.

[Guest]

21 hours ago, JEC said:

This is an existential question I know, do others think the market is peaking?   Are we on the verge of a recession? 

With gas prices soaring, ongoing supply chain issues, and potential for war on the horizon.....

Are you moving into more conservative positions?

I am invested in mostly aggressive (but diversified) funds.   Thinking of moving to a more conservative position for a bit.   I'm 58 and planning to retire at 65. 

Welcome your thoughts.....

While there’s more downside risk to surprises and shocks than normal, I think there’s still more upside potential than downside risk.  If you move toward a more conservative bias, the worst case scenario is that you make a little less on the upside, but you lose a lot less on the downside.   Making less is not such a bad outcome, all else equal.  

[Kevin Slater]

6 hours ago, BnaC said:

While there’s more downside risk to surprises and shocks than normal, I think there’s still more upside potential than downside risk.  If you move toward a more conservative bias, the worst case scenario is that you make a little less on the upside, but you lose a lot less on the downside.   Making less is not such a bad outcome, all else equal.  

Loss aversion is a very real thing, most people fear more losing what they have than not making what they could.

Kevin Slater

[KeepItReal]

13 minutes ago, Kevin Slater said:

Loss aversion is a very real thing, most people fear more losing what they have than not making what they could.

Kevin Slater

[Guest]

55 minutes ago, KeepItReal said:

Well, in the real world that we “non Buffet” minions live in, the data suggests that being on the sidelines on just the 10 best days in the market makes the difference between a good real return and a negative real return.  Loss avoidance is a valid strategy, but it rarely covers inflation.  Balance and diversification are more effective tactics.

https://www.cnbc.com/amp/2021/03/24/this-chart-shows-why-investors-should-never-try-to-time-the-stock-market.html

now, if you can catch the best 10 and be on the sidelines on the 10 worst days, then I bow down to you!   But even buffet doesn’t try to do that

Edited April 9, 2022 by BnaC

[+ Vegas_Millennial]

On 4/8/2022 at 2:44 AM, JEC said:

Are you moving into more conservative positions?

I'm 39.  My retirement accounts are 90/10 stock/bonds split.

Even at 58 and retiring at 65, you don't plan to withdraw and spend 100% of your retirement fund at age 65, do you?

You're going to want to leave much of it in stocks to grow and outpace inflation to withdraw when you're 70, 75, 80, 80+.

Bucket 1: 1-7 years.  How much are you going to withdraw in the next 7 years (right when you turn 65/66).  Keep that amount in a stable value fund such as money market.

Bucket 2: 8-15 years: How much are you going to withdraw in 8-15 years (ages 65-73)?  Keep that conservative, but still keeping up with inflation. Think mostly individual bonds, and maybe some boring stocks like S&P500 index.

Bucket 3:. 15+ years.  Invest away!  All sticks, mix of US and foreign, developed and emerging markets, small cap and large cap.

 

[Rudynate]

Mine is aggressively invested almost all in Financial and tech stocks.  I think I have a little in CD funds and a little in bond funds - not completely sure.   My financial advisor makes most of the decisions - I just rubber-stamp them.  He's very smart - I trust him, for the most part.   Just before the financial collapse, I made one good call -about two weeks before the market crashed, I went all to cash and stayed in cash for months until the market volatility quieted down.   Otherwise, I'm not that smart an investor.

I made quite a bit on option plays - I just happened to choose the right advisor  -followed all of his plays and made a lot money.   I'm thinking of starting to work with him again.

[+ JEC]

On 4/9/2022 at 1:40 PM, Vegas_nw1982 said:

I'm 39.  My retirement accounts are 90/10 stock/bonds split.

Even at 58 and retiring at 65, you don't plan to withdraw and spend 100% of your retirement fund at age 65, do you?

You're going to want to leave much of it in stocks to grow and outpace inflation to withdraw when you're 70, 75, 80, 80+.

Bucket 1: 1-7 years.  How much are you going to withdraw in the next 7 years (right when you turn 65/66).  Keep that amount in a stable value fund such as money market.

Bucket 2: 8-15 years: How much are you going to withdraw in 8-15 years (ages 65-73)?  Keep that conservative, but still keeping up with inflation. Think mostly individual bonds, and maybe some boring stocks like S&P500 index.

Bucket 3:. 15+ years.  Invest away!  All sticks, mix of US and foreign, developed and emerging markets, small cap and large cap.

 

I like this thinking, curious ... is this your own approach, your financial advisor, something you read?

[+ Vegas_Millennial]

23 minutes ago, JEC said:

I like this thinking, curious ... is this your own approach, your financial advisor, something you read?

Something I read.  It was provided to me by my employer's retirement management firm.

[jeezifonly]

Hub and I able to invest in rental properties in a smaller market some years back- glad we diversified when we did. Have made back initial $$. We both have 401k plus some bonds and a few individual stocks. Both retired, 65, one of us collecting SS, other waiting for higher payout at 71. 
All of the rental units have remained occupied 98% of the time. All have increased in value. Fuckin’ lucky, they call it. Will be looking into more bonds in next few years to keep a chunk safer from wild market fluctuations. 

[Guest]

On 4/9/2022 at 12:40 PM, Vegas_nw1982 said:

Bucket 1: 1-7 years.  How much are you going to withdraw in the next 7 years (right when you turn 65/66).  Keep that amount in a stable value fund such as money market.

Up to 7 yrs reserves in stable value seems aggressive.  Assuming today’s inflation rate, a substantial amount of purchasing power would be lost.   

[+ Vegas_Millennial]

8 hours ago, BnaC said:

Up to 7 yrs reserves in stable value seems aggressive.  Assuming today’s inflation rate, a substantial amount of purchasing power would be lost.   

I agree.  But those were the figures presented by my employer's retirement management firm.

Personally, I plan to remain in 90/10 stocks/bonds even into retirement.  But my situation is unique in that I'll have an inflation adjusted pension to rely on that should cover 100% of my "needs".  Therefore my investments only need to cover my "wants".  In retirement, I don't plan on having more than 1 year of expenses in stable value.  But if I didn't have a pension I may think otherwise.

[Guest]

2 hours ago, Vegas_nw1982 said:

I agree.  But those were the figures presented by my employer's retirement management firm.

Personally, I plan to remain in 90/10 stocks/bonds even into retirement.  But my situation is unique in that I'll have an inflation adjusted pension to rely on that should cover 100% of my "needs".  Therefore my investments only need to cover my "wants".  In retirement, I don't plan on having more than 1 year of expenses in stable value.  But if I didn't have a pension I may think otherwise.

Well I’m jealous of the inflation adjusted pension, my investment plans are similar 

[+ augustus]

Most definitely looks like a recession is coming.  Inflation is a real problem and tighter money is on the way.  The economy isn't growing at all as it is.  The stock market mayhem is affecting the blue chip stocks now and this is not a good sign.  

[+ Vegas_Millennial]

Buying opportunities coming!  Start building that savings account!

[Beancounter]

On 4/8/2022 at 4:35 PM, pubic_assistance said:

When investing you merely need to be mindful of the components driving the market and who the winners and losers may be.

RIGHT NOW we are seeing a return of the Aristocracy.  In spite of all you well meaning lefties....your senile old state puppet, Uncle Joe is reigning over the greatest wealth re-distribution this country has seen since the Civil War...and it ain't being distributed to the underprivileged black single moms ( who they claim to love and cherish and "care" about" ) but it is floating to the TOP .... those people who ACTUALLY own and control Washington DC and whomever sits in the Oval Office ( except Trump who wasn't playing).

LUXURY industries are making BANK.

Commodities are struggling. Middle class is now the lower class.

Upper Class millionaires are now billionaires.

People are spending on a purse more than most people make in a year.

Moderator's note:  We really want to keep politics out of this forum.  Yes, government action does impact the nation's economy and an analysis thereof is relevant, but partisan pontificating and name-calling belong in the politics forum, not here.

My “applause” emoticon was for the moderator’s note and not the poster’s poorly thought out analysis. 

[Rudynate]

On 6/14/2022 at 12:01 PM, augustus said:

Most definitely looks like a recession is coming.  Inflation is a real problem and tighter money is on the way.  The economy isn't growing at all as it is.  The stock market mayhem is affecting the blue chip stocks now and this is not a good sign.  

Most importantly, though, is that recession is a self-fulfilling prophecy. When enough people believe a recession is coming, sure enough it happens.

[pubic_assistance]

9 hours ago, Beancounter said:

poorly thought out analysis. 

These is a difference between a difference of opinion and being "poorly thought out".

In my years I've seen many people form completely polar conclusions while given the same data.

[Kevin Slater]

Moderator's note:  Positions duly noted.  Now let's return to the subject at hand: is a recession coming?

[BSR]

5 hours ago, Rudynate said:

Most importantly, though, is that recession is a self-fulfilling prophecy. When enough people believe a recession is coming, sure enough it happens.

Hmm, I have to disagree.  A recession is the market's response to an overheated economy.  Because interest rates were ultra-low for years and because the government printed $trillions out of thin air, the economy overheated.  Recession was inevitable, regardless of what people believe.