I was really looking forward to the recession, sigh

Author

Damien Peters
February 07, 2023

This is awkward.

A few weeks ago Reader, I wrote to you about this upcoming recession and how to prepare. Besides the basic “don’t buy a Lambo right now” and “be ready for a layoff” I was very excited and optimistic about the investment opportunities that would be coming.

To prove this point, I’m starting an investment firm … just because of how strongly I believe this. But apparently, the recession might be over already.

Why We Will Might Have a Recession

Recessions (or corrections when they are milder) are when the economy slows down. “Officially” two-quarters of negative GDP growth. But really, we know it when we see it. Unemployment rises as layoffs happen, the stock market falls, people struggle to get by, all that stuff.

If we go back a few months, all the indicators were there. The Fed was raising interest rates rapidly to slow down the economy, as inflation was eating people alive. The stock market fell, tech companies started doing layoffs, and everyone prepared for bad times. And remember that war in Ukraine, well it’s still raging on.

With my bachelor's in economics fueling my understanding, I was ready. It’s the cyclical nature of the economy. I prepared for hard times to bring about good investments and got my spending in order.

But oh how quickly things have changed.

Why the recession may already be over

Well, while you might hear about a recession on TV, the numbers and the authorities are saying something very different.

Even with the hard-to-ignore headlines about massive layoffs, jobs are still plentiful. People are working and unemployment is low. The stock market has come back with a vengeance.

Meta (Facebook), who was just in the news for laying off 11,000 people. Well, their stock just jumped 26% om a day. Weren’t you struggling?!?!

This housing bubble that was supposed to be popping, is not. Prices are easing in some cities, but only the ones already overpriced. For the most part, the housing market is still tight with a lot of competition for little inventory.

Crypto is even back. I’m up 30% in the last 30 days! (DO NOT take this as an endorsement to invest in crypto … stay away. I got in early and got lucky. Knowing someone who won the lottery doesn’t mean playing the lottery is investing).

Talks of recession and economic slowdown started when the Federal Reserve quickly raised the interest rate. This causes the economy to slow down, which helps to stop inflation. Unchecked inflation is really really bad for the economy, so a little economic slowdown is worth it in the long run.

But even the Fed is slowing things down, with their latest rate increase being lower than the former. This means even they think things are getting better regarding inflation. The stock market has already responded to the good news and returns are up.

So what does it all mean?

It means that no matter how much you try, sticking to the fundamentals is always the best bet. Buy into the market, keep buying, keep investing. Things are changing, but now is a good time to buy, so was before, and so will tomorrow.

And always pay attention to the details. Some real estate markets are providing investment bargains. Some industries are poised for rapid growth. If you’re willing to put in the effort to understand these complex investments, learn how to find and invest in them, and manage them correctly .. there are additional returns to be captured.

Stay ready

I want to reiterate that none of us truly know what will happen. Don’t read this and think it’s time to spend money, ball hard, and think things can’t turn terrible quickly.

I’m staying frugal, continuing to invest, and tracking the markets. Anything can happen.

Point is you don’t want to be the person saying “it was all good just a week ago.” Play it smart and be pragmatic.

Damien Peters

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