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Author Topic: Signs we are heading for a recession...  (Read 981 times)

tradephoric

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Re: Signs we are heading for a recession...
« Reply #25 on: December 10, 2018, 01:12:48 PM »

Based on how much the DOW is falling today we could literally be hours away from testing the market lows in February.  Since the great recession any consolidated low in the market hasnít been violated.  I have a strong suspicion that it will be violated this time around.  If it does break we may see support at DOW 21,300 before a rebound and a retest of the 200 DMA (likely to occur around April 2019). 




The markets take the stairs up and the elevator down.  After the market hit a low in 2002 after the dot-com bubble there was 5 years of steady gains up before it started to wave back down.  The 5 years of steady gains in the market were wiped out in short order. 

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Rothman

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Re: Signs we are heading for a recession...
« Reply #26 on: December 10, 2018, 02:34:27 PM »

Recessions are based upon change in GDP, not the stock market.
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Re: Signs we are heading for a recession...
« Reply #27 on: December 10, 2018, 02:38:24 PM »

Recessions are based upon change in GDP, not the stock market.

Gosh, I guess my broker has no clue then why my trust account it down since she said it was the stock market.
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tradephoric

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Re: Signs we are heading for a recession...
« Reply #28 on: December 10, 2018, 02:58:13 PM »

Recessions are based upon change in GDP, not the stock market.



Over the past 118 years, the DJIA declined during every recession with only three exceptions. Those exceptions were the recessions of 1918-19, 1926-27, and 1945. Even so, these anomalies may be explained. First, the recession of 1918-19 was the second shortest of all, lasting only 211 days. Next, the recession of 1926-27 occurred during a time of intense stock speculation, which included a great deal of leverage. Moreover, the top marginal tax rate was slashed from 73% in 1920 to 25% in 1925, providing additional fuel for the stock bubble. Finally, the recession of 1945, severe as it was, may have been overshadowed by the euphoria over the end of WWII. Despite these exceptions, there is a clear trend between recessions and falling stock prices. - Source: https://www.thinkadvisor.com/2018/07/11/navigating-the-stock-price-roller-coaster-recessio/?slreturn=20181110145132
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Re: Signs we are heading for a recession...
« Reply #29 on: December 10, 2018, 03:04:56 PM »

Recessions are based upon change in GDP, not the stock market.



Over the past 118 years, the DJIA declined during every recession with only three exceptions. Those exceptions were the recessions of 1918-19, 1926-27, and 1945. Even so, these anomalies may be explained. First, the recession of 1918-19 was the second shortest of all, lasting only 211 days. Next, the recession of 1926-27 occurred during a time of intense stock speculation, which included a great deal of leverage. Moreover, the top marginal tax rate was slashed from 73% in 1920 to 25% in 1925, providing additional fuel for the stock bubble. Finally, the recession of 1945, severe as it was, may have been overshadowed by the euphoria over the end of WWII. Despite these exceptions, there is a clear trend between recessions and falling stock prices. - Source: https://www.thinkadvisor.com/2018/07/11/navigating-the-stock-price-roller-coaster-recessio/?slreturn=20181110145132

You also need to count the converse: DIJ decreasing significantly without a recession (1940Ė1942, 1987).

Also, 2001 went down more after the recession ended (2002) than during the recession.
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Brandon

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Re: Signs we are heading for a recession...
« Reply #30 on: December 10, 2018, 03:06:25 PM »

Recessions are based upon change in GDP, not the stock market.



Over the past 118 years, the DJIA declined during every recession with only three exceptions. Those exceptions were the recessions of 1918-19, 1926-27, and 1945. Even so, these anomalies may be explained. First, the recession of 1918-19 was the second shortest of all, lasting only 211 days. Next, the recession of 1926-27 occurred during a time of intense stock speculation, which included a great deal of leverage. Moreover, the top marginal tax rate was slashed from 73% in 1920 to 25% in 1925, providing additional fuel for the stock bubble. Finally, the recession of 1945, severe as it was, may have been overshadowed by the euphoria over the end of WWII. Despite these exceptions, there is a clear trend between recessions and falling stock prices. - Source: https://www.thinkadvisor.com/2018/07/11/navigating-the-stock-price-roller-coaster-recessio/?slreturn=20181110145132

Interesting chart.  It appears as though recessions were more common and longer-lived pre-1933 than post-1933.
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Re: Signs we are heading for a recession...
« Reply #31 on: December 10, 2018, 03:24:26 PM »

Recessions are also based on the gap between the rich and the poor.
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tradephoric

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Re: Signs we are heading for a recession...
« Reply #32 on: December 10, 2018, 03:28:56 PM »

That site discussed the nominal tax rate being slashed from 73% in 1920 to 25% in 1925 leading up to the great depression and how that added additional fuel to the stock market bubble that was forming.  The recessions that occurred in the heart of the great speculative bubble before the great depression are interesting to me.  With such massive increases in stocks you think there would have been a huge wealth effect going on where people would be buying anything they could get their hands on.  The only other time the nominal tax rate was slashed so heavily was Kennedy slashed it quite significantly in the early 60s and when Reagan slashed them again in the early 1980s.  This chart has been discussed before but there is the top nominal tax rates for the major economies dating back to the 1900s.  It's interesting to compare the effect tax policy has had on asset prices.



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Rothman

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Re: Signs we are heading for a recession...
« Reply #33 on: December 10, 2018, 03:30:43 PM »

Recessions are also based on the gap between the rich and the poor.
No.  An economic recession is two consecutive quarters of negative GDP growth:

https://www.investopedia.com/terms/r/recession.asp
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Re: Signs we are heading for a recession...
« Reply #35 on: December 10, 2018, 04:32:23 PM »

Recessions are also based on the gap between the rich and the poor.
No.  An economic recession is two consecutive quarters of negative GDP growth:

https://www.investopedia.com/terms/r/recession.asp

I think he was referring less to the definition of a recession, and more to the potential causing factors of one.
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kphoger

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Re: Signs we are heading for a recession...
« Reply #36 on: December 10, 2018, 04:42:30 PM »

GM ... is offering white color employees buyout offers. 

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NE2

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Re: Signs we are heading for a recession...
« Reply #37 on: December 11, 2018, 02:52:27 PM »

I don't know about anyone else, but my trust account has lost almost 25 percent of its value since January.
My trust in the president has lost 99.99% of its value since early January 2017.
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kphoger

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Re: Signs we are heading for a recession...
« Reply #38 on: December 11, 2018, 03:08:25 PM »

My trust in the president has lost 99.99% of its value since early January 2017.

How can you tell?  0.01% of zero is the same as 99.99% of zero.
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Re: Signs we are heading for a recession...
« Reply #39 on: December 11, 2018, 03:30:31 PM »

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