Recessions & Crashes: Memories & Lessons

[winston]

6 things you should do to prepare for the next recession

by Laura McCamy

Source: Business Insider

https://finance.yahoo.com/news/6-things ... 58522.html

[winston]

10 trading lessons for 2019 that we learned from the 2018 stock market selloff

by Brian Shannon

Lesson 1: “Blue Chip” is a marketing term. Owning these stocks will not shield you from losses

Lesson 2: Never buy a stock just for its dividend

Lesson 3: Small biotech stocks have unique risks

Lesson 4: Inverse stock splits do not create value

Lesson 5: “Story stocks” are great when they are rising, but price tells the longer-term truth

Lesson 6: Stocks don’t always go public at a time when it’s the best time to buy

Lesson 7: From failed moves, come fast moves in the opposite direction

Lesson 8: Big winners can become big losers

Lesson 9: A stock in a downtrend is considered ‘guilty until proven innocent’

Lesson 10: Just because a stock was positive in 2018 doesn’t mean the average participant made money

Source: Yahoo Finance

https://finance.yahoo.com/news/10-tradi ... 06636.html

[winston]

5 Numbers to Watch to Spot the Next Recession

by Jen Wieczner

1. The Yield Curve; When low rates augur bad news
2. Auto Loans; America’s other subprime problem
3. China’s Consumers; Forget GDP—keep an eye on retailers and tourists
4. Corporate Debt; How much borrowing is too much?
5. Corporate Profits; As workers get more, shareholders could get less

Source: Fortune

https://finance.yahoo.com/news/5-number ... 23147.html

[winston]

Should You Sell Out of Your Stocks in the Next Recession?

by David Van Knapp

There have been 15 recessions since 1926.

There have been 21 bear markets (defined as a 20% decline in the S&P 500) since 1929. Only 11 of them have coincided with recessions, which means there have been 10 independent bear markets not associated with recessions.

My overall theme is to think long term if you are in a position to do so. Over long periods of time, the overall direction of the stock market has been up.

If you are invested in the stock market, and if you are able to live with a short-term unrealized loss, stay invested.

The investor flaws identified from Dalbar studies are always the same: Ill-timed trading, selling out as the market drops, and not being in the market during times of recovery. In other words, selling low and buying high.

Source: Daily Trade Alert

https://dailytradealert.com/2019/06/24/ ... recession/

[winston]

How to Prepare for a Recession

by Jason Hall

Source: The Motley Fool

https://dailytradealert.com/2019/08/01/ ... recession/

[winston]

The 5 Most Important Lessons From the 1929 Crash That Matter Today

The Stock Market Crash of 1929 has 5 key lessons for today.
1. Buy and hold investing does not guarantee long term gains.
2. Paying heavily for growth can be risky.
3. A crash may come when it is completely unexpected.
4. A crash may occur despite rising corporate profits.
5. It may take years for stocks finally to hit bottom.

Source: Investopedia

https://www.investopedia.com/the-5-most ... yptr=yahoo

[winston]

Preparing for a bearish market

By M Shanmugam

A typical bear market signals a significant erosion of wealth of up to 40%. Investors generally recover their value in two years and can go up to six years.

The more unfortunate investors who put their money into assets without fundamentals do not recover their investments at all.

A vicious bear market where investors see half their value evaporating is when the key index drops 20% within a space of less than six months due to unforeseen circumstances.

Despite the constraints, keeping all the investments in cash is not an option. Capital conservation is only a strategy to adopt for the short term while waiting for investment opportunities.

History has shown that asset prices recover by more than 40% after a bear market.In the past 45 years, there have been nine events where a vicious bear market - as defined by a 20% drop over a short period of less than six months – ravaged capital markets. The last one was in 2008.

After markets recovered in 2009, asset prices surged.

Source: The Star

https://www.thestar.com.my/business/bus ... ish-market

[winston]

Here’s how long stock market corrections last and how bad they can get

by Thomas Franck

KEY POINTS

There have been 26 market corrections (not including Thursday) since World War II with an average decline of 13.7%.

Recoveries have taken four months on average.

The most recent corrections occurred from September 2018 to December 2018. The S&P 500 bounced into and out of correction territory throughout the autumn of 2018.

The S&P 500′s close below 3,047.53 — its current threshold for a correction — also marked the quickest 10% decline from an all-time high in the index’s history.

Source: CNBC

https://www.cnbc.com/2020/02/27/heres-h ... KW,3V3PX,1

[winston]

When to buy during an ugly stock market rout? These charts have the answers.

By Barbara Kollmeyer

“It doesn’t matter when you buy, only that you buy,” is his answer.

Batnick says those sitting on cash and scared of more stock meltdowns should break up purchases, perhaps picking one day of the month to buy for the first four months.

Source: Market Watch

https://www.marketwatch.com/story/when- ... yptr=yahoo

[winston]

When the Bear Market Will Hit Bottom

Mark Hulbert writes that based on the VIX’s recent trading behavior, we can make a reasonable estimate that the bear market only has a couple of more months to live.

by MARK HULBERT

How much before? Based on bear markets since the VIX was created in the mid-1980s, the average lead time is 75 days.

Add that number of days to March 18 and you arrive at the first day of June.

Why does the VIX peak before the market bottoms? No one knows for sure, of course. But the general explanation among the analysts I’ve read is that, as Morgan Stanley put it, "after a shock, markets first become comfortable with the level of uncertainty (volatility), then with the level of price" -- and only then does the market bottom.

Pay close attention to the VIX in coming days. So long as it doesn’t rise back to the vicinity of its March 18 high of 85.47, odds will grow that the bear market bottom is only a couple of months away.

https://www.thestreet.com/opinion/when- ... yptr=yahoo