An Urgent Warning For Investors | The Coming Recession
Published: 2022-03-14
Status:
Available
|
Analyzed
Published: 2022-03-14
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
Goldman Sachs predicted a 35% chance of a US recession.
"Goldman Sachs increased the risk of a U.S recession to 35 percent"
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An inverted yield curve has historically been a strong predictor of recessions, with only one false positive since 1955.
"an inverted yield curve has correctly signaled nine recessions since 1955 with only one false positive in the 1960s"
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The yield curve is flattening, reaching its most extreme point since 2011, indicating a potential economic slowdown.
"we're currently seeing what's called a flattening yield curve which means the two and ten year treasuries are paying almost the exact same amount while the flattening is the most extreme it's been since 2011."
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The ratio of negative to positive corporate earnings guidance has risen to pre-pandemic levels, suggesting potential challenges for future earnings.
"the ratio between negative to positive guidance spiked above average for the first time since prior to the pandemic"
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Historically, the stock market has shown positive returns during recessions, averaging a 9.8% increase between 1869 and 2018.
"from 1869 to 2018 there have been a total of 16 recessions which had positive stock market returns in fact of those positive Returns the market went up an average of 9.8 percent"
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The stock market typically peaks about six months before a recession begins.
"on average the stock market tends to Peak six months before the start of a recession"
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The stock market has historically experienced an average drawdown of 29.2% during recessions since 1945.
"throughout every single prior recession since 1945 the stock market has at some point seen a sell-off with an average drawdown coming in at a whopping 29.2 percent"
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After a recession ends, the stock market has historically recovered and shown an average profit of 1.7% by the end of that year, with a 15.3% gain in the following year.
"by the time the recession is over the market actually recovers and is posted an average profit of 1.7 percent with an average gain of 15.3 percent the following one year"
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The stock market has historically been positive 100% of the time in the three years following every recession.
"in the three years following every single recession we have ever had the market was a hundred percent in the green"
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Official confirmation of a recession often lags, meaning people may not know they are in one until it is already significantly underway or nearing its end.
"you won't know you're in a recession until it's too late since technically a recession is two consecutive quarters of declining GDP we could be in a recession right now but not officially know it until much later"
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A bear market is a more reliable indicator of an upcoming recession than a recession is of a bear market.
"a bear Market is a better predictor of a recession than a recession being a better predictor of a bear Market"
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Stagflation, characterized by high inflation, high unemployment, and slow economic growth, is an increasing concern.
"the worst worry is the term that most people are completely unaware of and that would be stagflation for those unawares that inflation refers to a time of high inflation high unemployment and slow economic growth of which is becoming a lot more of a concern lately"
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Stagflation last occurred in the 1970s, marked by skyrocketing oil prices, rampant inflation, unstable interest rates, and companies cutting jobs while maintaining prices.
"it last happened in the 1970s when oil prices skyrocketed inflation was out of control interest rates were unstable and companies chose to hold their prices steady while simultaneously laying off their workers"
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The US reducing its reliance on other nations may make stagflation unlikely by removing downward pressure on domestic prices and wages.
"others argue that with the US reducing its Reliance on other nations that should in theory no longer put downward pressure on U.S prices and wages effectively making stackflation unlikely to happen"
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Five key factors contributing to recessions are sudden economic shocks, excessive debt, asset bubbles, inflation leading to interest rate hikes, and deflation causing low demand and high unemployment.
"the five major changes usually tend to be one sudden economic shock like the oil crisis of 1970 or the covet crisis of 2020. Two excessive debt which includes the housing crisis of 2007. three asset bubbles like the 2001.com crash fourth inflation which forces the Federal Reserve to raise interest rates and tighten Financial growth and five deflation caused by a lack of demand for goods and services which usually results in higher unemployment"
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The current economic climate shows signs of a recession, including the Russian-Ukraine invasion as a shock, 40-year high inflation, and potential asset bubbles in speculative markets.
"we do have sudden economic shock with the Russian Ukraine Invasion we have the highest inflation that we've seen in 40 years and some argue that we've seen asset bubbles forming throughout some of the more speculative parts of the stock market"
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It is advisable to remain invested, and even more beneficial to invest during downturns if a recession is occurring.
"the best course of action is to stay invested and if we are in a recession it's even better to invest when times are bad"
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No recession in history has lasted longer than 18 months.
"no recession has ever lasted more than 18 months"
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