Is a Recession Coming? | Insights #136

It often seems like the world economy is not prospering, but instead heading toward a recession. Negative news frequently dominates headlines, and it tends to catch the attention of investors more than its positive counterpart. The unfortunate reality is that optimism is rare and hard to come by.

If we went off headlines and article punchlines from the last two decades, we may think that the economy regressed. From the tough times in 2008 and the fall of financial institutions to 2020 when there was genuine concern that civilization as we knew it might collapse. Headlines were there to warn about the storm to come, but there was little thought given to what would happen afterward.

The peak of every negative news cycle produces the most fear and worry, and tends to be the time when winners and losers are determined. Those that accept losses at market lows and sell out do not participate in the recovery rallies to come, and those that are resilient and hold a long-term investment horizon are rewarded. Over the past 20 years, the S&P 500 has returned a cumulative 335.62%. That is the reward for weathering the storm.

EPISODE HIGHLIGHTS

• (0:00) Intro
• (0:59) Thoughts on the talk of Recession and how to actually think about it.
• (1:49) Recissions and the general relationship between the market and economy
• (2:58) Predicting the future, relevant news, and news cycles
• (3:57) Using information and trading on it, how does it pay off?
• (4:21) Interest rates and trading on assumptions
• (4:50) Long-term steady approaches improve your odds of success 
• (6:10) Short-term trading, why it just doesn’t work
• (7:45) Portfolio construction, keeping you invested and protected
• (8:39) The right question to ask about portfolio construction 
• (9:18) Health and Financial Health
• (11:03) Takeaways: Media, Economy, Dinner Convos
• (12:10) Consistency is key
• (12:20) Wrap Up