Day 200: Schedule The Next Recession
The Mother's Little Helper portfolio was UP today +$7,819.99 (+1.05%).
Overall GAIN YTD: +$167,795.65 (+28.74%).
According to CNN Money our benchmark index, the S&P 500 is up +9.85% Year To Date.
A picture is worth a thousand words. Below is a graph comparing the MLH Portfolio (Blue Line) with the S&P 500 (Red Line) year-to-date.
The portfolio had another good day, closing with a 1.05% increase, bringing the year-to-date gain up to 28.74%.
I'm repeatedly asked how long I think the current bull market will continue and all I can say is, "There's no expiration date on a bull market, it will last until it stops". Yeah, I thought that was a lame answer too, after I said it. I tried putting new batteries in my crystal ball but that didn't seem to reveal any new answers.
The question keeps nagging at me because I'd like to have a better answer. Every economist and stock analysts on the planet wants a better answer. This question which is really all about uncertainty gets at the very heart of everything investors hate; uncertainty. This got me to thinking about something someone told me a long time ago. This person happens to have a unique skill of looking at and interpreting data in ways the most people don't and then asking the question that nobody else thought to ask. I don't remember what numbers we were looking at that day but I do remember the advice;
"be careful not to confuse causation with correlation".
- Mari Baker
I think what people really want to know is when can they schedule the next recession. In our minds we all know that recessions are normal, they occur regularly, but we don't know exactly when they will occur. Since I've made a habit all through my academic and professional careers of jumping into things I know nothing about, exploring around and learning under fire; I thought it might be fun to jump into this age old question and see what I come up with. I took one economics course in my sophomore year of college, roughly 34 years ago, so I feel prepared for this. The challenge will be to separate what causes a recession from data that correlates around the beginning and end of a recession. I have no idea what I'm going to find, if my findings will be accurate, or that there will be anything useful to pass on. It's quite possible that all I find is a bunch of uncorrelated data that leads me to watching late night TV to burn off my frustration.
My hypothesis:
"Recessions are caused by manipulation of markets, money supply and energy."
I'll start digging and if I find some interesting data I'll see if I can put together some kind of a fun info-graphic to communicate my findings. Please feel free to contribute your thoughts. Get out your day timers, we're going to schedule a recession.
Stay Invested,
Clay Baker
Disclosure: I am personally invested long in these stocks that appear in the MLH portfolio and may purchase or sell share withing the next 72 hours. I am also invested in other stocks that do not appear in the MLH portfolio: BA, BRK.B, CELG, CSCO, CTXS, CVX, DOW, DVAX, FB, IBM, NTES, NVDA, OMER, PFE, PG, RDHL, SCHW, THO, TWX, VEEV, VZ, XLNX, XOM
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
This article is not intended to offer investing advice, guarantee 100% accurate predictions, or to be interpreted as providing a personal recommendation.
