Steve Blumenthal’s latest Forbes article Portfolio Moves As U.S. Recession Signals Intensify is apparently hitting a chord with investors with more than 10,000 views in less than 48 hours. Excerpt below:
Signs of recession are intensifying. The global economy is near or in recession, and we’re seeing that pressure begin to appear here in the U.S. It’s important to be on “recession watch” because the stock market suffers significant declines during recessions. However, you can position your portfolio to mitigate downside risk when recession signals are flashing.
A few of quick facts:
- Recessions tend to occur one to two times each decade.
- The last U.S. recession was in 2008, seven years ago.
- Economies naturally cycle between growth and recession.
- The stock market declines more than 40 percent on average during recessions.
- The last two recessions saw equity market declines of greater than 50%.If your portfolio declines.
- 50% from $100,000 to $50,000 you will need a subsequent 100% return just to get back to even.
Therefore, we must defend our portfolios against recession. Fortunately, the equity market is one of the best leading indicators for periods of economic expansion and contraction. Let’s take a look at a simple process with a statistically significant 79% correct signal history with data back to 1948 (Chart 1 below).
See full story in Forbes: Portfolio Moves As U.S. Recession Signals Intensify