How can something "suggest" a recession is "unavoidable." If its a suggestion, then by definition it isn't unavoidable.

These articles are silly. You'll find them for every time the market sneezes.

October 2015, World Faces a Recession Next Year: https://www.cnbc.com/2015/10/13/citis-buiter-world-faces-rec...

June 2016, The Next Recession is Already Here: https://www.cnbc.com/2016/06/21/the-next-recession-is-alread...

There might be a recession next year, but the Fed might cut rates, Brexit might not happen, the EU might resume easing and the stock market might double in the next 5 years. Nobody knows.

Things that keep me up at night as a software contractor/freelancer: if there's a recession, are contractors the first to go? One counter-argument is that contractors can be a cheaper way for companies to build products (since it's not full time), which might mean companies favor contractors. On the other hand, companies who are reluctant to lay off full-time staff may start by canceling contract relationships.

If you could know a recession was inevitable some time soon from publicly available information then that recession wouldn't happen in the predicted time frame. Everybody would see it coming, take their money out of the market, and it would happen instantly.

Would it be wise to wait a year before buying a house? If a recession hits it might turn my areas buyers market into a fire-sale.

I guess if the fed isn’t raising rates then it’s not an issue. Waiting would also allow someone to increase their down payment.

What scares me is how everything nowadays is available to purchase through financing.

A toaster form BestBuy.com? Finance it for $4/month. New iPhone for $1000? How about monthly installments instead? It's not even the exception anymore, it's the norm.

Even without exorbitant interest rates, the idea that there is supply or demand for financing all aspects of life does not bode well for people's long-term wealth...

Recessions are a necessary part of the business cycle. A lot of people would argue that global central banks have gone too far trying to avoid a recession and thus the next recession will be particularly brutal.

Like laws designed to encourage forest growth, when the fire eventually comes it burns far brighter than the fire that burns in a forest left alone.

Only a portion of the yield curve inverted, and based on recent history, its predictive ability for the US economy is not what it used to be.

IMO, The important indicator to keep an eye on is earnings growth, which in the most recent quarter was (from what I recall) sales growth +8% and EPS growth +25%.

One headwind to keep lookout for next year will be tough comparison because of the tax cuts.

Also, like others have mentioned, doomsayers are a dime a dozen. Personally, I like to see what people with skin in the game have to say/are doing to their portfolio allocations.

I was in high school during the last recession so I have no idea of what to expect, but how does one take advantage of a recession? Do you invest in blue chip stocks that you assume will ride out the recession and bounce back? (Apple in Google in 2008 would've been solid investments), do you take advantage of rising interest rates and buy bonds in addition to boosting your savings account? Do you buy a house? What's the m.o?

IMO, market is down because of increase discount rate (risk), not a decrease in earnings (fundamentals)

Given the projected IPOs next year (Lyft, Uber, AirBnB) I think this is a little pre-mature. I think the bull market has another year in it. That being said I'm shifting some of my assets out of the market.

If this is true, where is the best place to invest 10k-100k USD today?

His main justification: "Just about everyone I talk to in the capital markets, including erstwhile bulls, acknowledges that things are slowing down." And "everyone knows it is coming." And "everyone knows that inverted yield curves are the most reliable recession indicators."

He talks about home builders "getting crushed," which means they're trading at levels last seen in 2017. The large tech stock haircuts he refers to means most are at levels they traded at earlier this year.

I'm not saying he's wrong about a recession coming, but if you're looking for some real substance to justify that stance, you won't find it in this article. Just a guy copying Trump's tactic of saying "everyone knows" instead of offering evidence.

> "We have lost sight of the fact that a recession has cleansing properties, helping to right the wrong of the billions of dollars allocated to bad businesses while getting people refocused on investing in profitable enterprises."

If this were true, loss-making companies would never IPO. There is such a thing as a normal boom and bust cycle. The "bust" portion is the recession, the hangover after the bull market effects of the US tax cuts have petered out.

I was a freelance dev contractor in the 2008/2009 financial crisis.

To what you said above, both can be true. But it depends on the client's business.

I got completely crushed last time. But my clients were primarily in travel and fashion/lifestyle which both got hit hard early. And I was trying to bootstrap a social media startup at the time, which was also in travel. So I got destroyed.

Typically agencies and freelancers are the first to feel a recession. Vendors are more expendable than W-2 employees so contracts get stalled out or cancelled as soon as the warning signs hit the board room.

However... I've known of some people who actually did quite well last time around. Generally they were offering lower rates than the competition and specialized in maintaining software that was essential to recession-proof businesses (like entertainment, education, government etc). They had long-term contracts where they were essential to these businesses, and they lowered their rates to be competitive. This was eventually how I recovered as well.

Basically my advice is - prepare to shift from quality to quantity for a bit, diversify your client portfolio and put effort into building long term clients where you're essential.

Ultimately yes, as a contractor your continued employment in financially difficult times is going to be a hard sell. Of course, you could always take a permanent position for a time if that would give you more of a sense of security. Or, you could fall back on the additional savings you've been able to make as a contractor, that higher rem being the benefit of the hedge you were making in the first place.

That said, I've seen companies shed permies over contractors in difficult times, because if you form the view that said difficult times will stick around for a while, the permies look worse as aliability/drain on your projections than having contractors which, although they are higher cost, can be shed trivially. Depends on location though, areas with stronger protections against letting go of permanent employees are the ones where organisations see those same permies as more of a long-term liability. In right-to-work states, for example, it's just as easy to shed either group.

I would assume contractors are first to go. Work moves in house. In house staff gets cut. The remaining staff gets to work on what the contractor did and what the employees that left did. The company is not beholden to contractors as much as they are to their left over employees. Everybody has got to pay bill. The company will usually look out for their employees.

That's always what I've been told. This isn't apple to apples, but I've worked as a government contractor for the past 15 years. In my experience, when money starts to dry up, sub-contractors are the first to go, but sub-contractors who are particularly important get offered positions by the prime contractor. I've also seen across the board pay cuts go out rather than people getting cut, but that rarely ends well (as anyone who knows their worth will immediately start looking elsewhere).

In my experience, contracting has been a leading indicator with both contraction and expansion. Contractors get cut before full-time, but when things are still shaky later, contractors get brought on first before the company is willing to increase full-time headcount.

I got crushed in 2008-2010 when I was freelancer. There simply was no budget for anything in the companies I had worked with.

I am sure there is some business angle for freelancers to do well in a recession but I can't come up with one.

And with this mindset most people will not take any action until the big guys have taken an action. The timing could be the predicted time frame. But it is only too late by then and middle and lower class suffer. Top 1% controls around 40% of America's wealth.

Many banks saw 2008 coming. Now the fundamental reason for this inevitable breakdown was also very lucrative at the same time. This meant every bank would try to stay in the game for as long as possible because quitting too soon would have them fall behind.

In the end you get this game where two or more cars are speeding towards an edge and who breaks first loses.

That would assume everybody can interpret the information correctly and make an unemotional decision regarding their investments. In reality, everyone wants the party to go on indefinitely.

The author said as much himself:

> Yet, I wonder if it is possible to have a recession when so many people expect one. The worst recessions are the ones that people don’t see coming.

My hypothetical ability to predict the future does not mean that you're able to do the same.

That's not what happened ten years ago in many different countries.

Keep in mind that you'll see a corresponding increase in rents as more buyers in a given area hold off on buying. The demand ends up just shifting. That's been the effect in Boulder, CO.

It all comes down to this: If you are looking at housing as an investment, you are buying into a decades long market aberration driven by super low interest rates and government policies.

Otherwise, if you look at it in terms of the specific supply and demand curve in your geographic area, you can better steer your decision making. My area (northwest of Denver, CO near Boulder) has local government policies which have seriously constrained housing supply. That made me choose to buy despite a less favorable macroeconomic landscape to home ownership.

In Palo Alto, we have been seeing softening real estate prices for a month or two. My guess is that sellers are concerned that tech stocks will tank (as they have) and that potential buyers will dry up. I am personally waiting on the sidelines to trade up because I'd rather sell for less and buy for less in order to lock in the lower property tax rates. Most realtors I've spoken with seem to think a pause/dip in Palo Alto area real estate is inevitable in the next 6-12 months, and we're starting to see it already.

Lots of factors in play, you'd need to bet correctly that the recession will actually affect prices that way in your area.

Also, the yield curves just inverted within the last week, and the average time-to-recession from that point is 12 months. So you may want to wait longer than a year.

Or... just buy something and be done with it, as long as it fits your budget and your income is stable, it's just housing and in the long run it'll probably work out fine anyway. Timing the housing market isn't any easier than timing the stock market.

Interest rates rising will lower prices a bit (in the end, a buyer taking out a loan will likely be paying the same, because what ever drops in house prices goes to the bank in interest). I dropped my home's price (undesirable neighborhood) pretty aggressively in the last 6 months before hiring a property manager to rent it out. I would recommend just keeping your eye out for deals. Right now is off peak season (in the US) so you might find someone desperate and get a bargain.

This is where I am right now. On the one hand, waiting allows me to save up more, and put more thought into where exactly I'm buying. On the other hand, waiting for a recession to buy is timing the market which is notoriously difficult to do.

If your area is already a buyers market, then you should just go ahead, and buy some place you like.

Depends on the area. Like here in Portland prices were already way lower than surrounding areas so prices have increased a lot over the last couple years. It's been a shock to people that are in their little bubble and don't realize it's still cheaper than Seattle, SF, LA.

If people here really knew whether or not that was a good idea we would be billionaire rock-star investors. Trying to time the market is a fools errand for most folks.

My Econ game isn't as strong as it used to be, and this is by no means financial advice, just some spitballing...

I'd guess interest rates will rise, hopefully not like they did in the 80s, but I think Trump has been running the economy too hot... meaning inflation and your payments will go up. We want people to save (invest) not spend (consume) to fix this upcoming case (if I understand it correctly). As a result, I doubt lending will freeze since interest rates are likely to rise so getting a loan really shouldn't be too difficult if you've got good credit and a downpayment...

To be honest, I'd say it likely won't matter as recessions of some kind are fairly common and generally relatively benign with even moderately good economic policies. I highly doubt we'll see anything like the 2008 recession...

/shrug

If you are in the USA and have capital gains look for an opportunity zone investment. Incredible new upside of the Tax Cut and Jobs Act of 2017.

* defer your capital gains that you owe today * pay no capital gains on any returns if you comply with terms of opportunity zone investments (10 year holdup of capital requirement) * earns a 15% discount on your original capital gains taxes owed

Depends on your time horizon. If you have over 20 years before retiring the broad stock market is still likely going to outperform pretty much any other investment but it will be a bumpy ride.

Why would you invest just before a recession? Keep your cash and invest when the market is down.

The bond market, and international stock market are less correlated with US large cap stocks. Historically though you are still better off investing in the S&P 500 or similar, it is virtually impossible to know what the market will start falling and when to sell, or when it is at the bottom and to start buying again. Time in market beats timing the market.

I'm playing the cannabis market right now and i'm bleeding.

not just because of the slow growth of the canna industry, but the fear in Trumps trade wars and volatility in commodities is affecting every asset class.

Honestly, I would keep my hard cold cash. sit on it until the opportunity arises.

If you're investing for the long term, why not just find a spot you're comfortable with on the way down and invest money in an index fund while the market is down? A recession is the perfect time to invest, isn't it?

If you have a good long term strategy you shouldn't be worried about timing the market. I invest in a few ETFs, 80/20 stock to bond ratio, a mix of domestic USA / international.

I probably won't make massive gains but in the long run I'll make ~5% steady.

I think if you value steady returns over wild swings you can do well with Vanguard ETFs - the low overhead offsets the les returns than day trading / active buying and selling

If it were my money, I’d be all in with stocks that have exposure to China trade war fears. When the current strife passes, they’ll rocket back up. I tend to buy the fear and sell the joy (if I sell at all.) But that’s just me.

if you think the market will go down you should short it...

In the spring of 2008 I bought gold. It worked quite fine.

investing should always be based on your age, not market conditions

over 60? lower risk...it may take longer for riskier assets to recover than you have to live

under 30? higher risk...the markets have always done well over a multi-decade timeframe

Into a piece of yellow metal.

Edit. More background on that:

In 2014, after years and years of my parents droning "think about buying a house," I finally decided to teach my parents a lesson, and show them just how bad their investment advice is.

So in the end, I lost around 53 thousand dollars in total from FX, fees, lawyers, drop of property value, and my ability to sleep well at night.

And in 2016, I got kicked out of Canada, as my employer was unable to secure me an LMIA after trying 3 times.

The only thing that prevented me from hitting the bottom was that I was also saving gold since I was 15, when I first bought few crumbs from semi-legal gold prospectors from China.