The Most Anticipated Recession In History Is Still Coming


“Those who do not remember the past are condemned to repeat it.”

-Benjamin Graham, The Intelligent Investor.

Investors recently pushed the S&P 500 (SPY) and NASDAQ (QQQ) back near all-time highs in a euphoric year-end buying frenzy. The emerging consensus from Wall Street analysts is that this year will be even better. However, the consensus is likely to be wrong. History shows us that markets alternate between cycles of extreme greed and extreme fear. High valuations relative to earnings, low savings rates, and bullish investor sentiment have proven time and time again to be warnings, not all-clear signs. This is even before considering the business cycle– shuffling millions of American workers in and out of the labor force depending on global economic conditions. Over the last 25 years, there have been three recessions, with S&P 500 bear markets of ~-, ~-57% from the 2007-2009 , and ~-34% during the 2020 pandemic lockdowns. The next recession will likely see declines of a similar magnitude, bringing maximum pain to the overleveraged and huge opportunity to those with cash on hand.

Recessions Happen: But Why?

Leading Economic Indicators (Conference Board)

Long And Variable Lags

Net Corporate Interest Expense (New York Times via FRED)

Don’t Fear A Recession, Prepare

Bottom Line

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