All Signs Point Towards a Recession Coming... But Is It?
THE BIG THING I WANT YOU TO KNOW:
An indicator of a recession has just reached the highest levels since the last market crash…but how often has it reached those levels in the last 60 years without the market crashing? Be weary about how you’re responding to these “predictions” about the market!!
A lot of the news this week focused on two things that are happening in the market:
The market had a record-breaking week! The DOW reached a level it’s never reached before and stocks are UP. It’s one of the big reasons that the Fed came out and said there’s a good chance they’ll lower interest rates in the near future.
There are certain key indicators that are showing the market possibly heading into a recession. <record scratch> This recession indicator is something the the Fed created and it evaluates inverted bond yields (super boring and not important for our current purposes) Every time there has been a recession in the last 60 years, this indicator has been over 30% and it’s now over 30% again — it’s the highest it’s been since the last financial crisis.
So it’s kinda been a weird week! On the one hand, we see the market going up again and killing it, but there’s also this fear of a recession coming.
“Every time there has been a recession in the last 60 years, this indicator has been over 30% and it’s now over 30% again — it’s the highest it’s been since the last financial crisis.”
We’re in the longest bull-market in history, so I understand that people are starting to wonder how much longer it will last.
Of course, it will drop at some point, no one knows when, but now we have this “evidence” to fuel the anxiety….
So, how do you respond now that you “know that the recession is coming?”
i want you to stop that whole line of thinking.
predictions will not give you financial peace, and trusting them may lead to financial ruin.
Side note: At the beginning of every new year we do a show where we take a look at all the predictions made about the market for the previous year and make fun of them… It’s my favorite show. : )
Again, the indicator that the Fed came out with said every time there has been a recession in the last 60 years this has been over 30%. Why is it not helpful to look at an indicator like this?
They don’t flip it around! The flip side is, how many times has it been over 30% and we haven’t had a recession??
If you’re scrolling quickly and missed the last sentence, go back. It’s big.
It’s like if I were to say to you that every time the power goes out at my house there’s a storm. That doesn’t necessarily mean that every time there’s a storm the power goes out — in fact, it usually doesn’t go out!
“It’s like if I were to say to you that every time the power goes out at my house there’s a storm. That doesn’t necessarily mean that every time there’s a storm the power goes out — in fact, it usually doesn’t go out!”
Follow The 💰 Money, Sunshine! ☀️
Sunshine and rainbows don’t make the money! Doom and gloom sells. It’s been a HUGE focus of our show recently, as it seems to be at an all time high and you can’t let it impact your financial decision making.
There’s any number of reasons to why the power goes out at my house — it could be because of a storm, or it could be because an old tree fell on the power lines, or who knows why?!? But I have zero control over all of those things.
So what should you do?
How does this impact your financial planning?
And more importantly, should I hire someone to come out and trim every tree within ten miles of my house? Or move somewhere with less frequent storms?
No! I go buy a generator. Now I have peace of mind.
That’s exactly what you need to do financially.
we have to approach investing and our ideas about the market in a proactive preparedness!
You have to base your financial plan and the amount of risk you are taking not on what you perceive is going to happen in the market and its inevitable recession, but build your plan on what you can control.
When the market going up or down it isn’t good or bad. Sure, if you’re someone nearing retirement, you should pull back in investments to be safe, but if you’re in your thirties, a recession could be unbelievably good for your long-term net worth because you’re buying everything on sale! It’s not black or white, it’s how you respond to it based on YOUR situation!
So, please, if you hear nothing else hear this: Make sure that you’ve built an investment solution based on what you can control.
Make sure you’ve got a (financial) generator in place, because it will not only protect you long-term and move you toward the future you want regardless of what the market does, but it will give you an incredible peace of mind.
Are you prepared for the next storm? Stop trying to cut down trees!
Don’t fall into the trap of what the news is selling. Your personal financial plan and its success is entirely based on your own personal situation.
What is the happiest memory you have of when the power went out?