Batten down the hatches

Under normal circumstances, bond investors like to see long term bonds get the highest yield. Short term bonds get the smallest yield. Ideally, a short term bond would get around 2% while a long term bond would get around 5%.

Well, it is not happening. For the past two quarters, bond investments have been inverted. Short term bonds are getting more expensive than long term bonds.

When this happens, it suggests an economic slowdown is about to happen. Several indications are showing just that. Chinese production is down. Germany may already be in a recession. EU countries are keeping a close hand on their chips, and a hard Brexit will send shock waves through the markets.

45 today is in a tweetstorm claiming it is all the Fed's fault. What are you hearing from your people?

If we are going into a downturn, what are you doing to weather the storm?

Comments

  • I don't have any form of pension plan as a self employed person. I've been taking financial risks now for 40 years. I got comfortable with it. I'm an outlier about investments, risk and not caring excessively about money. We had nothing we could not fit into a 1963 VW Beetle when we finally could afford to be married. I think we'd choose a more comfortable car to sleep in if we had to do that again: older adult bodies.

    I calculated at one time I'd lost 36% of paper value with a stock market "correction", but didn't sell anything so did not realize any real losses: it was all on paper**, and back to pre-crash levels within 3 years and then exceeded. My return over time with not panicking and buying when things are low is 26% last time I checked. So if the market crashes, I'll consider withdrawing some into cash as it descends and then buy back when it bottoms out. It's all guesswork. When the market crashes is also when donations decrease. It's good to have pre-saved the money you plan to give away in my opinion.

    So in answer to your question, what I am going to do to whether any storm? - nothing really. There's no storm actually, just fluctuations, which don't make a lot of difference if you have 5 years to make it all up. If the entire economy crashed and we lost 100% of savings? I'd continue to work. I like what I do; I don't necessarily want to work forever, but I could.

    I actually think that trumpy is progressively damaging the American economy, by not being responsible or informed and because he thinks he's smart about money when he's not. I think he's an idiot in general and an especially idiotic about world affairs, and doesn't understand anything except himself. He's got a particularly misinformed bad attitude about everything that isn't him. But his behaviour is going to create investment opportunities I think. Probably in undervalued companies because of idiot tariff retaliation nonsense. On principle I do not invest in anything American since Ronald Reagan (another dangerous idiot, though entitled slightly due to dementia, but still a bad man), but some Canadian things will be affected, and I'll buy some undervalued things here.

    I'm being a little facetious with some of this but also truthful, but I think that excess worry about money is absolutely not worth it. Note: worry about not having enough to meet basic needs, that is another matter, and very serious.

    I have wondered if the sin of avarice, of greed, is not just about wanting to be rich but also being excessively troubled about money.


    **"paper loss" - the value of shares or funds decreases but you do not sell them when they decrease so you never actually lose shares, and when the shares go up, the value comes back.
  • I am a wicked creature, but the one up-side of a recession right now is that it would take away Trump's major advantage going into an election. Only God knows why people are fool enough to credit a president with economic conditions that often (usually?) are caused by things predating him (for example, conditions within the first three months of his presidency!), but they demonstrably DO, and so as I watch my retirement savings disappear I'll at least take comfort in knowing that he's up for blame rather than credit.
  • If ABdPJ gets his way we'll be in a recession by Christmas, whatever the global economy does. If not, the bounce from the relief of avoiding catastrophe might propel us through comparatively safely.
  • sionisaissionisais Shipmate
    edited August 16
    I'm in the throes of house buying so a 5 year fixed rate mortgage looks a reasonable choice notion. It removes some uncertainty, or at least pushes it back to October 2024.

    I also have my civil service pension to fall back on. Some of that is in payment alongside my salary, and I'm earning more pension as I continue to work. It's a time when being a long-term civil servant appesrs to be working out well, and our new minister is Boris's brother who is neither a buffoon nor a Brexiteer.
  • Barnabas62Barnabas62 Purgatory Host, Epiphanies Host
    If ABdPJ gets his way we'll be in a recession by Christmas, whatever the global economy does. If not, the bounce from the relief of avoiding catastrophe might propel us through comparatively safely.

    Google didn't help me. Who or what is ABdPJ? Initially I thought typo!

  • Barnabas62 wrote: »
    If ABdPJ gets his way we'll be in a recession by Christmas, whatever the global economy does. If not, the bounce from the relief of avoiding catastrophe might propel us through comparatively safely.

    Google didn't help me. Who or what is ABdPJ? Initially I thought typo!

    Alexander Boris de Pfeffel Johnson, I presume.
  • I am a wicked creature, but the one up-side of a recession right now is that it would take away Trump's major advantage going into an election. Only God knows why people are fool enough to credit a president with economic conditions that often (usually?) are caused by things predating him (for example, conditions within the first three months of his presidency!), but they demonstrably DO, and so as I watch my retirement savings disappear I'll at least take comfort in knowing that he's up for blame rather than credit.

    Trump is practicing his harm mini.isation strategies now. 1. It's the incompetent Federal Reserve not doing what he says; and 2. It is the fake news media and the Democrats that are talking the economy down to boost their political interests and harm Trump.

    I reckon Trump knows that the economy is tanking. He's not doing anything to stop it, like pulling back on his various trade conflicts. He's busy plotting to avoid the political blame.
  • CrœsosCrœsos Shipmate
    Simon Toad wrote: »
    Trump is practicing his harm mini.isation strategies now. 1. It's the incompetent Federal Reserve not doing what he says; and 2. It is the fake news media and the Democrats that are talking the economy down to boost their political interests and harm Trump.

    He'll probably also blame China, because that's what he does. I also predict that the Republican plan to address any economic downturn will rely heavily on tax cuts for the very wealthy. Of course that's not much of a prediction since tax cuts for the very wealthy is the Republican plan when the economy is good, when it's bad, and when it's stagnating.
  • Gramps49Gramps49 Shipmate
    A gentle reminder. Even though I mentioned Trump's reaction to the Inversion, it this thread is not about Trump. It is asking whether you are prepared to weather yet another recession.

  • Well, it's not the older generation we should actually worry about. It's the younger. The Millennials. They're being economically screwed even in good times.
  • Barnabas62 wrote: »
    If ABdPJ gets his way we'll be in a recession by Christmas, whatever the global economy does. If not, the bounce from the relief of avoiding catastrophe might propel us through comparatively safely.

    Google didn't help me. Who or what is ABdPJ? Initially I thought typo!

    Alexander Boris de Pfeffel Johnson, I presume.

    Piffle for short.
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