Published October 26, 2018
Below is a good post from Ben Carlson regarding the ability of the stock market to predict recessions. The data says the stock market is bad at such predictions, rising half or more of the time in a 3-6 month window ahead of the onset of a recession. So, if the stock market “looks ahead” by 6-9 months as we are often told it does, the market is no better than a coin flip in foreseeing recessions. It may not look ahead all that well is the point. (more…)
Published September 7, 2018
It is said that stock markets climb a wall of worry. As concerns dissipate, investors feel more free to take risk and buy stocks. A sustainable market rally takes hold when the worries are replaced by a “Goldilocks” scenario where market participants view the near-term future as favorable for stock investing. They buy shares with little concern. The lack of concern reaches a point of complacency where investors are undervaluing potential risks. (more…)