My Investing Muse

There is much talk about yield curve inversions and their correlation with recessions. the news painted a mixed response to the inverted yield curve Yield curve extracted from Reuters From Investopedia: An inverted yield curve describes the unusual drop of yields on longer-term debt below yields on the short-term debt of the same credit quality.   Sometimes referred to as a negative yield curve, the inverted curve has proven in the past to be a relatively reliable lead indicator of a recession. The yield curve can be expressed using a percentage of the 2-year and 10-year treasury yield rates or the net difference between the 2 year and 10 years treasure rates.  From marketwatch.com - note that a recession usually follows the inversion An inversion in these particular points has correctly predicted a recession with a lead time of between eight months and two years in each of the last eight recessions .   The average time between the formation of the inverted...

This is a landmark week in our modern history.  Ukraine found herself caught in a battle as Russian troops poured into the country from several sides. This single "black swan" event has commanded the attention of all countries and brought volatility to the global markets.  This has overshadowed the various good news which would have otherwise introduced positivity to the markets.  US CDC has eased their masking guidelines following a drop in the following: drop in new Covid cases per 100,000 residents in the past 7 days drop in new Covid related hospitalization drop in hospitalization by Covid patients There is also another landmark moment with the nomination of Ms Ketanji Brown Jackson (the first black woman) for Supreme Court.  On top of this, the Core personal-consumption-expenditures index (Fed's preferred inflation measurement) climbed 5.2% from a year ago to hit a new 38 years high for January 2022. photo taken from news - congestion at US ports There is some p...

  Market dips or corrections are part of the journey of investing. Peter Lynch shared that in 93 years, the market saw about 50 market corrections (or dips that are more than 10%) and out of these 50 corrections, 15 of them will be more than 25% in drop.  Thus, this implies that in an average of every 2 years, we should experience a market correction of more than 10% and every 6 years, a crash of more than 25%. From another source,  a  correction  is generally agreed to be a  10% to 20% drop in value  from a recent peak. This can happen to a single company or market as a whole. A  market crash  is usually a  more than a 20% drop in value in the market . The chart above shows an important element - the market always recovers after such corrections (listed by the various corrections from 2009 to 2018). As per 4th Nov 2021 (GMT+8hrs), S&P500 stands at 4660 is way beyond the 2800+ seen on the chart ending Q4/2018. From the chart abo...