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What will you do to help yourself survive if we get another GFC this year?

An inverted bond yield has proved a predictor of the last six recessions in the USA.

Right now the US bond market is staring investors straight in the eye and saying, "there's a recession on the way".

When the yield on 10-year US government bonds finally slipped below 2-year yields overnight,
equity markets dropped, around $1.2 trillion on the S&P500. 

Yield curve inversions are seen as solid predictors of recessions over the next one to two years.

Equity markets often enjoy a last gasp rally after a bond inversion, but on average fall 30pc once recession bites.

Rising trade tensions, crumbling manufacturing data, low inflation and weaker US profits are key drivers of the collapse of short term bond yields below the 10-year rate

Posted - August 17, 2019
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Responses


  • 44603
    I don't know much about macro-economics, but I ensured my own survival by use of a common version of microeconomics...planning and saving. In case of my demise, my wife is secure also. Too many folks have forgotten about that.
      August 17, 2019 6:09 PM MDT
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  • 46117
    Here is what I know.  THE RECESSION IS THE ONLY THING THAT MAY END TRUMP.  I am willing to forfeit a few meals for that one.  
      August 17, 2019 6:10 PM MDT
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  • I usually stay far away from American politics on this site, but, the funny part is the true recession  won’t likely hit until 2020-2021. So if he is not elected again,  he will love this and blame the newly elected. Even though he’s a HUGE  part of why the rescission is coming. Same as he took credit for low unemployment when he became president. That was as a result of Obama’s presidency, not Trumps. These things take time to yield results. I personally know, because of the type of work I do, that a lot of jobs left Canada to move to the states because of Obama’s tax breaks given to company’s in your country for bringing in growth and employment. Not that I was happy about that lol. But give credit where credit is due. 

      August 17, 2019 7:41 PM MDT
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  • 5391
    The idea is to position your investment portfolio toward the long term, to divest obvious risk, and increase liquidity in the eye of a market downturn. 
    All of the doomsaying may or may not come to pass, but it comes from somewhere. But if you hold substantial net worth in investment products, professional guidance is worth the price
      August 17, 2019 6:30 PM MDT
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  • 4624
    I have only a small portfolio - a second inheritance after Mum died.
    It's safely invested for long-term stability, low-yield but minimal risk.
    I have zero debts and prefer to keep it that way.
    The downside is that our income is very small, barely enough to make ends meet.
    The upside is, being too old for anyone to consider us employable,
    we don't need to work. I can't overstate how wonderful that freedom feels.

    You sound like you have yourself in a good position, Don - well able to take care of your family's needs. :)

      August 17, 2019 7:32 PM MDT
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  • 5391
    I think your absence of debt is laudable, and given your income, very wise indeed. Whatever your budget, that you can live within it, speaks to this wisdom. Not enough people can do this.  

    That said, every portfolio is worth the periodic “check up”, given the fluid conditions that exist today, stay wary of complacency. 

    As for us, my wife and I are set for life. I sold my business and other interests in 2007, invested the proceeds and retired to paradise here on the Gulf Coast. “Managing” the portfolio is now a minor hobby. 
    While I won’t be buying any airlines or sports teams, it is satisfying enough that my future great-grandkids will be able to go to a good college. 
      August 18, 2019 5:48 AM MDT
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  • 4624
    It heartens me when I hear good stories of people who have done well in their lives. Thank you for that. :)

    I rang my broker about a week ago to discuss whether any adjustments were needed. He suggested that perhaps I should move into some managed funds. I decided to say put where I am.
    Recently there's been a spate of serious mismanagement of such funds - too many are up to it in superannuation and banking. A recent Royal Commission found that it was deliberate: fees for no services, selling packages to people with obvious intellectual disabilities, and so on. Twenty legal reforms were recommended. The government slapped them on the cheek with a white cotton glove, told them they were naughty boys and to go behave themselves properly. No one believes they will. So people have been deserting the banks for credit unions in droves. And those who could exit their super funds have.

      August 18, 2019 1:36 PM MDT
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  • 5391
    Might be time to consider another broker. As with our personal health, it’s worthwhile to get different opinions. 

    As you aware, investment banking is not a role model of ethical purity. But I don’t think most average adults need their advice very often, and are well served to thoroughly consider any financial advice. 


      August 18, 2019 2:55 PM MDT
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  • People moving their investments to low risk is what caused the yield inversion though... 
      August 17, 2019 7:47 PM MDT
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  • 5391
    Then logic tells us the risk there has changed, no?

    It is crucial to stay abreast of what your investments are, where the equity is, what is trending. Know when to hold ’em, know when to fold ‘em...

    Even during the GW Bush recession, there were still stocks that made good money, and not all real estate types took a hit. 
      August 18, 2019 5:23 AM MDT
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