My Investing Muse

During the bull market, my strategy is to  buy great companies at good discounts . I spend time going through their earnings, understanding their fundamentals, and identifying their moat. Once qualified, I “try” to obtain a fair value and take my position. After purchasing, I hope to hold the stocks for a long time, for decades should the earnings continue to demonstrate that their fundamentals are sound. Will this strategy work in the coming recession? Personally, I do not think so as downward price pressures are coming. My “current” strategy in lieu of recession In lieu of recession, I am buying inverse ETFs. It is buying the market to go down but at a lower expense than shorting. It could take a while before the market turns bearish eventually. I am not planning to add to any of my shortlist stocks during this “bearish” season that could last months. From these inverse ETFs, I have been taking profits and re-investing back the profits from my trades using week or month time hori...

S&P 500 Earnings - Historical Chart This interactive chart compares the S&P 500 index with its trailing twelve-month earnings per share (EPS) value. Whenever there is a crossover of value, we can expect a recession (area shaded in grey). This is an observation and there can always be exceptions. Based on the chart below, it has rightly “signalled” the recessions of 2000, 2008 and 2020. However, this is a typical lagging indicator as this crossover typically happens after the recession. This is due to the lagging updates from the quarterly earnings. For 2022, the charts look to point to another potential crossover. Thus, let us continue to be prepared for worsening market conditions. Chart  of S&P 500 and its earnings The following is a chart of the S&P 500 earnings forecast extracted from Gurufocus. S&P 500 earnings forecast from  GuruFocus From the  estimates , the earnings are expected to be in the red from Q4/2022 to Q3/2023. It will be followed by ...

  This report is based on  The Conference Board  which publishes leading, coincident, and lagging indexes designed to signal peaks and troughs in the business cycle for major economies around the world. Latest Press  Release  (Updated: Thursday, April 20, 2023) Extract from the 20 Apr 2023 press release: The Conference Board Leading Economic Index®  (LEI) for the U.S. fell by 1.2 percent in March 2023 to 108.4 (2016=100), following a decline of 0.5 percent in February. The LEI is down 4.5 percent over the six-month period between September 2022 and March 2023—a steeper rate of decline than its 3.5 percent contraction over the previous six months (March–September 2022). “The U.S. LEI fell to its lowest level since November of 2020, consistent with worsening economic conditions ahead,” said  Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board.  “The weaknesses among the index’s components were widespread in...