The next Bear Market

Check our Roubini's views on the 2020 recession..

also...short ETFs

Not today. Check back tomorrow.

We have a little ways to go Mr. James

When, what, how bad - who knows? One thing we are reasonably sure of is that each recession was caused by something that was new in the cycle, and there are plenty of new things in the last cycle, for example:

• Regulations limited banks' leverage, which made banks safer, but also made it so that banks are no longer the buyers of last resort. Who is going to absorb risk assets the next time? All the crap that banks used to hold are now in insurance companies and pension funds, but on a plus side those are not vulnerable to a bank run. Also, limited leverage means limiting the banks' role in expansion.

• QE - new this cycle, but probably won't make things worse

• Passive ETFs - Every individual investor feels they are liquid, but for the market they create an illusion of liquidity. What if all investors want to sell them?

• Passive investing in general, quant, factor investing - all have expanded during the last cycle, but it is unclear how they will affect the next downturn

• Emerging Markets - they were 20% last cycle, now - 60%. China was 5%, now 15%. Maybe this is for the better? Who knows...

Trump inflationary policies (like trade war)-->Debt issues and spillovers-->>banking bear-->>costly debt/run from dumb money-->>tech bear market-->>spills into other sectors?

Banking buffers and current shy away from excess risk has us on firmer ground. Thus, the recession should be milder than 2008. I think Trump keeps people on the edge, which keeps dumb money from running hot and heavy bubbles.

Riskier borrowers are probably not getting a lot of cash--i.e. they are still able to make payments on CC and number of delinquent accounts hasn't spiked. I think people are still a little conscious and wary about debt problems, where they felt invincible during the lead up to 2008.

does everything have to be political? news flash: business cycles roll over, regardless of if it's trump, hillary, kermit, or a grilled cheese sandwich in the white house. oi vei, give it a fucking rest people. do your homework rather than just regurgitating what MSNBC or Fox says.

I have no idea what causes the next recession, but I am of the belief it will be benign in terms of market declines (which is what I really care about, my career and my wife's are recession proof). I put it at 30-35%. we've got rising rates but not rapidly so, generally healthy labor markets, valuations have come down (don't read john hussman, he hasn't made a good trade since bush's first term), and earnings growth is actually healthy on the whole. there are absolutely micro bubbles (crypto, high yield, etc.), but I would expect more of a change of market leadership like a mini 2000-2002 where everything goes down but it's mostly one sided, and value does better in the next recovery. only until lately has this changed, but until now we've been in mostly a sideways market since the late 90s (look at a logarithmic scale, jpmorgan puts out a good one).

I'm positioned more conservatively than normal just because I do expect something to give in the next 2 years, but by no means do I think we'll see another GFC or anything that severe in terms of market crashes.

what really worries me long term is our debt, but that's less of an investing issue and more political, so I won't go there.

Whenever I have any lingering fears about where the market is heading and the impact it could have on myself and my loved ones, barring actual cataclysm, I listen to the "what is money?" monologue from the opening of Ozark and the fear subsides.

One of the following causes it: -spike in inflation leading to speculation of increased rates -healthcare collapsing on new policy -china collapse -housing prices falling

As an investor I try to find opportunities on the cheap and hope I don’t get let go....