Will the US go in to recession again?

Will we go in recession again?  This is a question many wonder if a recession is likely to come again.  Well.  The answer is yes!  

Last week, i went to my friend's Vic house for a bbq and over a couple of drinks the question came up.  I want to clarify how i think a recession will come and when (or better in what time frame i expect this to happen).

Historically, the US economy has had many ups and downs (recessions).  Look it up and you'll see that in the last century, the US economy or the US markets, have gone through more than 8 or 10 recessions if i'm not mistaken.  Every time before we went to a recession, a number or 3 to 6 years of good strong years in the US markets have taken place.  We are currently in a 4th year of strong US market upside.  Yes!!  Believe it or not!  Strong US market and somehow stronger economy.  Why? How? Well, is all about injecting money to the economy.  Yes! Making money out of thing air and put in it to work.  The FED invest or buys bonds and mortgage securities when the markets are low (cheap).  Once this happens, smart money people or entities (hedge funds, big companies with money = Wall Street) do the same.  They buy and invest in markets and markets go up.  Then, after things get better, the individual investor (Main Street) puts money in.  

Now, what happens after the FED's stops putting money?  What happens when Wall Street and Main Street stop and pull their piggy banks out.  The answer is: fear is on.  Everyone pulls their money out and a "top" on the markets (long term speaking) is called.  

Unfortunately, once this "top" is in, the regular investor, the public, and most people won't know this.  After a number of 3 to 12 months, a recession "the bottom" is reclaimed.  Historically, and as far as i remember, recessions have lasted 9 to 18 months.  The Great Recession of 2008 to 2009 lasted almost past 2 years!  

So, based on what i said and with my resources - and we can call it guessing too : ), the US markets or US economy will bubble up and pop by late 2013 through mid 2014.  The decline will last again either 9 through 18 months and the financial mongers will start come out of their holes claiming that the US is going down and China will take over the world hahaha.  

So, the new recession will be called in 2014 through 2015.  There it is!  If i'm right, you'all better send me a check for my commissions or for saving you money : )  The FED will stop pumping money soon, housing will react and go sideways (we hope), smart money investing (Walls Street) will take out their money in order to cash out and celebrate all these 4 years of money making and the regular public, consumer spending, discretionary spending, consumer sentiment will drop.  

Just remember this: what ever goes up, must come down.

But, no worries!! after 2015 or 2016, United States will rally and kick ass like a champ for many years.  Then, we will start a new era where people will want to come to live the American dream again.

I'll explain how this may happen later.  Just a hint:  Energy boom.  The new United States of Oil and Energy of America (i hope too)

Pepe

-- This is Market Analysis, not a recommendation.

My Comments of this Recent Market Week at a public blog

1. JosephApril 13, 2013 at 11:09 PM

   OK. I missed calculated the top and lost half of my ytd gains by trying to short the markets. For the meantime, this event has tought me that shorting against a bull market and calling a top is too risky since they are 2 powerful forces you should not bet against when they are together. For now, I'm going to sit on the side and be patient and disciplined. I will wait for the next intermediate bottom and buy in increments as the markets decline. Buy the dips. I will then wait for the markets to rally and make lots of gains as I will be buying triple etf funds to ride the way up the hill in May. In the markets, the only way to make money is by making decisions with probabilities. And now I fully agree with the saying that the trend is your friend.

   Reply
2. 
   NaqviApril 13, 2013 at 11:59 PM

   Hey Joseph. Good comment. Trend is the only friend one should have in this market. Market tends to deceive the majority with its cunning ways. However, if you trade with the trend you are more likely to get bailed out on a wrong entry vs if you enter against the trend.
   
   However, always keep in mind that any counter-trend move can turn into a new trend or new bear market, under the right circumstances. In other words, when majority of investors get confortable with a direction of trend, it reverses. Therefore, one should keep this possibility in mind.

   Reply
3. 
   JosephApril 14, 2013 at 12:55 PM

   I agree. But, it's a risk I'm willing to take. It is the probability of the us markets topping and bottoming at the intermediate term level. And with the probability that spx will reach 1650 or more by the end of this year.

Standard and Poor US index

Well.  This time i'll write in english.  And pardon me for my grammar : )  (like the song form Incubus "Pardon me while i burst"?  I think this is what they say :)  Anyway, its just late and i don't know what i'm saying.  haha.

Let's talk US market stuff.  I follow the Standard and Poor index everyday.  And i have followed it for the past 5 to 6 years.  Every year i read and analyze more and more about it.  The S&P market index is one of the most followed index in the world.  It's a combination of 500 mostly US companies that have a lot of exposure to the american consumer.  And some international too.  When ever the american consumer spends money, the S&P 500 makes some gains very often.  If you were going to go back and search some stats of the S&P, you would notice the S&P rallied several times during the Christmas seasons.  Why? because it is the time of the year where most people spend money to buy gifts and others.  

So, now you get an idea of what the S&P is but you can always google it.  At this time, what I am doing is researching for other seasonal and historical moments of the S&P tops and bottoms, moves to the upside and downside, crashes and other behaviors of this index.  Yes, behavior.  The S&P moves accordingly to human investor psychology.  Not the human psychology, but the human investor psychology.  It is very interesting what i found and i will share this with you all sometime.

P. 

Bolsa de Venezuela

El presidente Chavez fallecio ayer como ya lo deben de saber.  Bueno, no le deseo mala suerte o que mal por el, pero si que jodio mucho a su pais.  Lei un articulo en CNN que desde que Chavez anuncio su enfermedad del cancer en 2011 el stock market de Venenuela subio como cohete hasta ahora.  Subio 300% en solo este corto tiempo.  No suena nada mal.  Cada vez que se escuchaba malas noticias de Chavez parece que la bolsa de valores de Caracas aumentaba en valor.  Lamemtablemente, como extranjeros que somos no podiamos invertir ahi.  No que yo fuera a invertir pero como hubiera sido...  hmm. 300% wow!!  Estaria pasandola en alguna playita con la family.  http://money.cnn.com/2013/03/06/investing/venezuela-stock-market-chavez/index.html?iid=HP_LN

P

For english plesase use google translate

Hola a todos.  Estoy creando un blog a cerca de finanzas, economia, y otra cosas interesantes.  He encontrado esta area de economia global muy facinante que estoy pensando en compartir con uds.  Saludos a todos mis amigos y familia.

P.

For english plesase use google translate