Musings about Life and Investments

https://www.youtube.com/watch?v=cJQTw1waBlg&t=348s Don't panic after the yield curve inverts. 1. Stocks generally still rise 15% on average about 18 months after the yield curve inverts. 2. On average stocks only peak 24 months after the first sign of inversion. This means we could see the bull rally last until March 2021! With 15% appreciation! 3. The main "yield curve" to take note is the 10 - 2 years, not the 10 - 3 months. 4. Generally we won't see a recession until 13 to 34 months after the inversion. So we won't see a recession until Apr 2020 earliest, or Jan 2022! That's a long long way off! In summary, we will still see around 15% of capital appreciation, which is in line with my view that one bad year in 2018 will follow up with 2 good years. A recession is likely to happen around end 2020. Just remember this is probably the final leg.

The US yield curve has narrowed the most since Sep 2007. The S&P500 peaked in Nov 2007 and crashed over 50%. The 3 months is now lower than the 10 years for the first time in over 11 years. Please read the article below. https://www.cnbc.com/2019/03/21/a-key-recession-indicator-just-did-something-that-hasnt-happened-in-12-years.html The 2 years v 10 years hasn't inverted though. It is at its thinnest spread of 0.112% now. At any time it could invert. There is a lead time of 16 months before the next recession so I'm looking at a US recession in mid 2020. Stock rally could end by mid to late 2020. Also, the old adage to "sell in May and go away, don't come back to St Ledger's day" historically seems to apply every alternate year, we may not see a May sell down in 2019, but it may happen in 2020. So this stock market rally could be short lived. Hang on to your seatbelts and be nimble. I foresee a 10% correction very soon. Then a continuation...