My Investing Muse

Is the macro so bad?   What is the macro (economics)? According to Investopedia: Macroeconomics is the branch of economics that deals with the structure, performance, behavior, and decision-making of the whole, or aggregate, economy. The two main areas of macroeconomic research are long-term economic growth and shorter-term business cycles. Gross Domestic Product (GDP) For a start, 2 successive quarters of GDP decline in the US is a good start on why the macro is bad.   US GDP (2018 - 2022) Source: https://www.bea.gov/news/2022/gross-domestic-product-second-quarter-2022-advance-estimate According to the US, this alone does not imply recessions.  However, we are expecting earning compressions in the coming earnings reports. With the recent PMI coming out from China, the demand for production is slowing down.  China is one of the big producers and this should imply a drop in global demand too. Inverted Yield Curve An inverted yield curve shows that long-ter...

More investors have sounded their concerns on the impact of war, geopolitical events on the stock market.  I have compiled some of my thoughts on this matter. The above summary is extracted from www.investopedia.com and here is the article: https://www.investopedia.com/solving-the-war-puzzle-4780889 Note that the 1990 invasion of Kuwait caused total drop of 16.9% where the market hit the bottom after 71 days but recovered in 189 days (slightly more than 6months).   But what is more of concern for me is the murmur of the potential market crashes.  Here are few to note: The above are some of the major crashes in the market where crashes ranged from 22% to 86%.  Peter Lynch gave a fantastic summary of the market (based on his observation of 93 years in the market).   In every 2 years, the market will drop 10% and more and in every 6 years, the drop will be more than 25%.  But the market always recovers. ‌ We should anticipate these and do not sell in panic. Th...