Is a Recession Coming?
March 9, 2019, marked what many consider to be the longest bull run in market history. Bull run, as in 10-consecutive years of increasing share prices in the stock market as a whole.
The previous economic catastrophe began on that fateful day of March 9, 2009, when the S&P 500 index hit a low point of 676.53. The S&P 500 has since then settled at 2,869.16 as of August 27, 2019. That represents a return of approximately 324% over a 10-year span.
The graphic above, courtesy of Investopedia, illustrates some of the noteworthy economic and political events that took place to sway the market upward or downward during this incredible 10-year run.
The big question remains to be "how much longer will this last?"
Perhaps the best course of action is to take a peek [under the hood] to examine the real-economic activity that has been taking place to identify clues that may reveal how much longer this extraordinary run will continue...
We can affectionately refer to this as the Calm before the Storm
I tend to approach this by first examining the actions that have taken place by some of the most influential CEOs in the marketplace. More specifically, I look to see if any major layoffs have been occurring...
Here are some of the notable layoffs that have taken place so far this year:
- Nissan to announce 10,000 job cuts worldwide on August 29
- GM expected to layoff at least 4,000 workers
- Uber announces 400 Job cuts as Profitability Doubts Linger After IPO
- Ford Motor Company to cut 12,000 jobs in Europe
- Deutsche Bank could layoff 20,000 workers
Of course, there are many reasons that contribute to massive layoffs, but it usually boils down to two factors:
- Falling Sales
- Shrinking Profit
Another [under the hood] indicator goes a bit deeper into the weeds...
As an asset manager, part of my job is to allocate capital in the most efficient manner possible. With that said, I spend hours at a time studying the annual reports, balance sheets, cash flow statements and so on of potential investments that I have set a target on.
Without getting too detailed and technical, what I will say is this.
When allocating capital I hunt for companies that exhibit strong performance and then I look for opportunities to buy in when the market undervalues the stock price of those companies.
In today's climate, it is very difficult to nearly impossible to find worthy investment opportunities because most of the stock prices (market valuations) seem to be highly overvalued in relation to the actual value of the underlying business.
As a whole, the global economy and global profits are slowing.
This may be a good time to re-evaluate your investment portfolio positions if you have not already done so.
A recession hurts those who are unprepared and creates lucrative opportunities for those who have anticipated it.
If you valued this article please hit the 'like' button and also share via your Twitter, LinkedIn, Instagram, and Facebook social media platforms. I encourage you to join the conversation or ask questions in the comments section of this post.
Disclaimer: Hudson Wealth Management, LLC (HWM) is a FINRA registered investment adviser firm. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Before investing, consider your investment objectives and HWM's fee schedule. The information provided herein is for illustrative purposes only and does not constitute personalized investment advice, recommendations or solicitations to hold, buy or sell any investment or security of any kind. All images and return figures shown are for illustrative purposes only and are not actual customer or model returns. Past performance does not guarantee future results.
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Eric K. Hudson specializes in the following...
- Financial Advisor
- Comprehensive Financial Planning
- Wealth Manager
- Retirement Planning
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- Investment Portfolio Manager
Internet Forensic Research Scientist | Private Developer Google Page-1 Ranked GEO-Profession Domain Names
5 年Only if you're a Democrat with a persistent, losing, glass-half-empty? attitude for America. Very different from a "CAN-DO" Constitutional Conservative attitude.
FS and IT Senior Buyer at University of Chicago
5 年Good Job on the article Eric. I appreciate the detail and research you did to provide the information. You were the first person in my Link'din circle to speak about the legalization of marijuana and now here we are. Legalization is spreading at a rapid pace. This to me means I need to really consider what you have said here in this article. Thank you for sharing.?
Safety Manager at Capital Precast LLC
5 年Message received. Prepare for it.
Best Selling Author, Innovator, Sr. Executive - Bridging the 99,000 foot gap between Strategic Goals & Execution
5 年Fourth year of every presidential term has slight downturn as investors wait to see who wins. Betting on the negative & spouting doom is both cheap & easy. Forecasting the upturn is sign of true pro. Thats why you call Eric he predicts the upturns.
Commercial Real Estate
5 年Absolutely...it's coming...and soon...