The Federal Reserve's decision to cut the federal funds rate on July 31, 2019, the first time in 10 years, signifies several things:
1) The Fed screwed up in December 2018 by hiking rates for the 9th time in three years. Cutting rates just 7.5 months after hiking rates is like getting a divorce within a year. The signs were everywhere, but the couple simply chose not to look because they were too horny.
2) The Treasury bond market is a better indicator of the economy's health and dictates the proper interest rate policy, not the Fed. All year and parts of last year, the yield curve has been flat or inverted, telling the Fed it needed to cut rates as growth slowed. The Fed finally relented.
3) The Federal Open Market Committee members may have PhDs and plenty of financial experience, but they are often guessing at the best course of action just like the rest of us. Do not treat their word as God. Do not underestimate your own abilities to make money either. Relying on someone else to make you rich is suboptimal.
4) We should all be on high alert for an impending recession within the next 12-18 months. The more the Fed cuts, especially when rates are already so low, the more we should worry.
Note: Obviously, all this changed after the pandemic. But after 11 Fed rate hikes, the Fed should probably cut rates in 2024 and beyond, otherwise, another recession will likely happen. We need to prepare for a recession.
Recessions Always Follow Euphoria
Due to my experience working through the 2000 dotcom bubble and the 2008 housing bubble, I've learned that the greatest downturns tend to happen right after the most euphoric of times.
1999 was especially awesome because you could buy practically any internet stock and double your money within a few short months.
It is clear to me we are currently in the Euphoria/Complacency stage. How long we last in this stage is hard to know.
We've been in a bull market since 2009 and the majority of us are the richest we've ever been. As a result, it's understandable to be punch drunk with financial happiness.
The median age in America is 38, which means that about half of the U.S. population has never significantly lost money in the stock market or real estate market.
When so many of us feel like we can't lose, we can often lose the most.
Late cycle indicators include:
- The rise of the Financial Independence Retire Early Movement. I've been writing about FIRE since 2009 with zero fanfare until circa 2017. Now you can't go a day without reading or watching an early retirement story.
- The rise in remote work and freelance work. Going to work in an old stuffy office is so passé. According to the Freelancers Union (yes, there is such a thing), by 2027, more than 50% of American workers will be freelancers vs. ~40% currently.
- The return of zero money down purchases for homes. To compete for more business, lenders are rapidly lowering their standards just like they did before the housing bust.
- The explosion in credit growth despite credit card interest rates reaching 5-year highs. Consumer confidence is so high that they don't mind paying usurious rates.
- Insiders from companies like Beyond Meat cash out to retail investors through a secondary offering after shares have soared.
When 23-year-olds making $30,000 a year tell me they have no problem retiring early because within 20 years they'll have amassed a $2,000,000 net worth by eating at Applebee's every day, never spending any income on fun, and earning a 12%+ compounded return, you know we are at max euphoria.
I have many more examples of illogical and delirious types of thinking. However, if I listed them all, you'll start thinking I'm a meanie with no heart. In this day and age of super sensitivity, this would be a dangerous road to take.
Instead, you'll just have to search the internet for stories about people who think they're going to live the good life on a modest financial nest egg with their lives never changing for the worse.
A Fed Rate Cut Almost Always Precedes A Recession
You may not accept any of my late-cycle indicators or believe my stories about euphoric people who think they just can't lose. That's fine. I can only share with you my personal experiences and the feedback I get from the over one million people who come to this site each month.
For the unbelievers, let's just look at the data from my favorite recession indicator chart. The chart below is from the Fed itself.
The blue line is the historical effective federal funds rate. The shaded gray lines indicate a recession. The red arrows that I've unartistically drawn emphasize the correlation between the Fed rate cuts and a recession.
Notice a pattern? As you can clearly see from this unbiased chart, a recession almost always follows within 12 months after the Fed starts to cut rates.
A Rate Cut To Help Save The Economy
It's important to understand that a recession does not occur because the Fed has cut rates. A recession follows because of the normal boom-bust cycle of the economy. The Fed is only making reactionary moves to try and prevent a recession because it is unable to predict accurately an economic cycle.
The classic boom-bust cycle can be illustrated by the housing market. The time-lapse between when developers first realize and then meet soaring demand for housing may be years because it takes time to build new apartment buildings and single-family homes. As more and more supply floods the market, prices fall.
The key is to have a large enough balance sheet to build and invest counter-cyclically, not at record high prices.
The Fed Is Often Behind
When it comes to the timeliness of rate increases or decreases, the Fed is perpetually behind. We saw an example of this inefficiency with the rate hike in December 2018 followed by the cut in July 2019. If the Fed was more efficient, the effective fed funds rate would be much less volatile and there would be no recessions.
The Fed certainly has more economic data at its fingertips than the average person. But even if the Fed foresees a dramatic slowdown in the future, it cannot transparently say so for fear of spooking the market. Thus, oftentimes the seeming lack of clarity in its statements. The Fed rightly fears that whatever it telegraphs will become a self-fulfilling prophecy and render its policy ineffective.
Therefore, a smart Federal Reserve Chairman will learn to speak for hours without saying anything meaningful. Ex-Fed Chairman Alan Greenspan was famous for talking gibberish. He successfully pawned off the bubble he helped build to Ben Bernanke on January 31, 2006.
If the Fed can continue to speak more gibberish and only cut rates this one time, the Euphoria/Complacency stage will likely continue. Borrowing costs are lower and the Fed is signaling the economy is strong enough not to warrant further cuts.
But if the Fed starts to cut interest rates more than two times and in larger increments, then a recession will most likely hit and the S&P 500 will most likely decline months from now.
Anecdotes Plus Data Likely Equal Reality
The key to reaching and maintaining financial independence is to avoid blowups. The blowups are what ruin lives because they not only rob you of money but of precious time.
You cannot afford a financial blowup if you are retired, within five years of retirement, have dependents, have a disability which may reduce your ability to work for longer than a potential recover, don't have enough passive income to cover your basic living expenses, or are delusional.
If you're still within the first 10 years of your financial journey, are able to eat at Applebee's every day, and never plan to have kids or take care of family or friends, feel free to take as much risk as you want. It's all about you baby!
For regular folks, I suggest being much more cautious at this stage in the cycle.
Please do not have revolving credit card debt, ever. Pay cash or don't buy it at all. The average credit card interest rate of 18% is highway robbery.
Please don't be tempted into buying a new car either because your car loan interest rate is now a measly 0.25% lower either. Paying much more than 1/10th of your gross income for a car is truly one of the worst purchases you can ever make. Drive your beater for a while longer.
Do refinance your mortgage if you can break even within 24 months and plan to own your home for years after. Fixing your living costs is one of the best financial moves you will ever make. An inverted yield curve is like borrowing free long term money.
Do save aggressively with banks that pay a higher interest rate than the current 10-year bond yield. Such an arbitrage opportunity is rare and should be exploited. If the markets tank but you're earning a risk-free 5%, you'll feel splendid.
Don't be so naive as to wish a financial crisis on the world so you can “buy assets for cheap.” Assets valuations are a reflection of their projected cash flow. A stock is not cheap if its price halves and its earnings decline by 90% for the next couple of years. In fact, the stock has gotten more expensive. Besides, you might not even have a job that will give you the guts to buy “on the cheap.”
Most of all, learn to enjoy your life regardless of where we are in the cycle. If you're on top of your finances, then you should be fine no matter what happens. It's only those people who have risk exposure incongruent with their risk tolerance who lose big.
Don't be like those people.
Related: When Will The Fed Cut Rates? An Exercise
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Related: It Feels A Lot Like 2007 Again – Reflecting On The Previous Top
Sam is spot on by comparing continuous Fed rate hike back in December of 2018 to a quickly divorce. It’s like getting married in Vegas and then next day trying to get an annulment.
I’d be more inclined to interpret the Fed Rates chart as indicating that precipitous rises in the rate tend to cause recessions. Especially when there are no definitive effects of inflation. The Fed tends to raise rates when they get a whiff of inflationary indications and projections, then, when they’ve hobbled the economy which was doing just fine, panic and lower rates when they see that they’ve set things in motion to kill the golden goose.
In this cycle, the economy was (is?) doing great, they know inflation will happen eventually, so they go in and meddle with something that’s not broken yet. Then they claim credit for preventing inflation. Not very impressive.
Hi Sam – How would you proceed with this knowledge when considering buying a condo in a HCOL area such as Southern California where the motivating factor is a place large enough to start a family. Example: 1 bedroom -> 2 bedroom condo.
Home sales seem to be slowing…would you put some offers 10% below asking price to protect against the potential for future lost equity? Or would you “bet” against property values rising in the next 2 years and make a decision at a later date.
Tough call. There’s a lot more inventory now, I am buying this year is better than buying in the first half of 2018. Property downturns generally take 3 to 5 years play out.
I wouldn’t be surprised if prices for about 15% from the peak. So you can put in some lowball offers now, that should help you.
The thing is, volume is low right now which means there could be some pent-up demand as interest rates have collapsed a lot. They could be back to a strong market in the spring of 2020. So I would be aggressively looking right now and looking at some stale listings.
What would you advise an extreme car guy to do when, after reading these articles and learning a little bit, is extremely in over his head on a car? I am 24 years old, got a windfall, financed one of my favorite cars at 56k after tax, make $56k a year, my payment is $605. My rational is i work for a family business and live at home so i have no rent. Starting a modification business of my own (carbon fiber aero parts) with the parts being for the car I’m financing.
Negative yielding debt now at 15 trillion. Capital is fleeing down Exter’s Inverse Pyramid. Sovereign bonds are but a pit stop to the ultimate destination.
Interesting comment … inverse pyramid? …. please elaborate!
Good article. There are many warning signs. I’m have a plan/strategy for the recession, so I’m not afraid. More about that in my blog if someone is interested. Bring it on baby!
DJIA at negative 720 as of this posting (bit before 1pm, Monday, Aug 5).
Sam, thanks for another great post. I have been a reader for years, not much of a poster though. I am 28 years old with around $340,000 in “liquid assets” including my IRA/401K. My liquid assets position is currently divided into stocks ($221,000 – 65%), cash ($102,000 – 30%) and bonds ($17,000 – 5%).
It is worth mentioning i have about 40K in student loan/credit card debt with an average APR of 4%, so it is not a debt i lose my sleep over, specially considering it can always be paid off, but given the low rate i don’t worry much about it.
My annual income is modest at around $80K deriving from salary $70K and passive/side income $10K. Right now what is left on a monthly basis after mortgage, car, bills, daycare etc etc, I’m merely breaking even income/expenditures wise.
Do you think, given my age and my time horizon of still over 30 years before i retire, that i am playing it too conservatively? I figured if a stock market crash does happen ( and it will) and worst case scenario it drops 60% i will stand to lose or more properly (devalue) by about $130,000 which is something I “think” i could stomach, since i will have over $100,000 cash to get me through it if worst came to worst. but again, i have never been through a market crash. I was actually able to build all of my wealth through the stock market, as i started investing (coincidentally) in 2009, right after the crash when i had just turned 18 years old. My salary has increased periodically throughout the years, since i started in retail banking at 18 years old, as a teller making around $25,000 a year.
As you can see, the little i have has been made through good old regular hard word and dollar cost average investing in the market for the past 10 years. What would you recommend my portfolio breakdown should be, and what advise do you have on how to best stomach a potential $100,000 loss/devaluation resulting from a market crash?
thank you for your time Sam.
Why is it that a recession almost always follows within 12 months after the Fed starts to cut rates? Doesn’t the Fed cut rates to try to avoid a recession?
The Fed follows the EuroDollar yield curve. These are USD deposits outside the control of the Fed in foreign banks. In effect, this Eurodollar system has functioned as the world’s central bank for decades and it’s expansion is what has inflated USD financial assets. But it has been in retreat since 2007. The GFC was a result of the Eurodollar collapse. Central banks stepped in to try and ameliorate the collapse but are doomed to fail.
China and the BRICS are setting up an alternative system. BRICS 5.
Can somebody translate this? Thanks.
When looking at the fed funds/recession chart, what strikes me is how LOW the rates are currently by historical standards. How worrisome is it that the Fed only has a ~2-2.5% range to play with before it hits 0%? In the past, this has typically been 5-10%, so a much larger tool at the Feds disposal. Any conjecture on how this would impact a recovery?
It’s all relative. Although the ABSOLUTE amount to cut isn’t large, the percentage cut can still be effective and significant.
I am cautiously optimistic.
That said, business confidence is waning as everyone puts things on hold and as this continues it will eventually effect the consumer. Feels more like a shallow stage (very low growth vs recession). I know in my world (tech) the feeling is more pronounced right now, as so many companies are effected by overseas and China.
I think it’s very prudent to trim exposure to equities, more so if you are closer to FI.
Interesting discussion! Everything depends on where you are in your earnings. Ive made too many mistakes trying to time, read this article which confirmed my thoughts! Just wait it out if you have time, go safer if you dont.
seekingalpha.com/article/4275606-148-years-dividend-growth-investing
BTW love the picture but dont get it :)
This is a thorough and well written article. The comment I am about to post is not a throw down of the effort, but more of an observation of the general population mindset.
This is an intellectual masturbation for 99 percents of the population!
Why?
Ninety percents of the people who read this article do not have any involvement with all the economic fundamentals discussed in this blog.
This is similar to locker room talks of sports with passions, but none of the participants are part of any team – real players or real coaches who make the calls and execute the plays.
All the discussed macro-economic fundamentals are being formulated and carried out by an exclusive team at the Federal level that have solid data not just within the border, but global. Given the access to that big data, many decisions are executed not without luck in implementation.
Our country is blessed with the size and the freedom no other country in the world will ever have the same fortuity – we are too big to fail and we sit on top of the world shoulder.
The fact that all the economic points discussed in this article when executed at the Federal level will be impacted by how the rest of the world reacts to the decisions – and when final outcome trickle down to us, the citizens of the country, the probability of our individual forecasts (more like guesses) are less intelligent than the local weatherman’s predictions.
Meanwhile, we spent countless hours of our precious time passionately discussed, worried, depressed and trying in-vein to fortify our lives years after years and forget to live our lives with family and friends.
Here is the fundamental financial math that every one of us can be the player in our own lives –
1. 90% or greater of probability of success for the duration of 30 years or greater – design your own lifestyle expenses and divide that number by 0.04 and that is your financial independence target.
2. 95% or greater of probability of success for the duration of 30 years or greater – design your own lifestyle expenses and divide that number by 0.02 and that is your financial independence target.
3. 100% or greater of probability of success for the duration of 30 years or greater – design your own lifestyle expenses and divide that number by 0.01 and that is your financial independence target.
All three options will take at least 10 years for planning and execution – with option 3 is the hardest to implement.
Caution – DO NOT change the financial independence target after you have succeeded. Find something that you are passionate about and go after it. If the passion earned you an additional dollar, use it as an external metric that measure your passion and the effectiveness of your execution.
With so much time and financial resource above the population – you must harness the blessing toward something useful – and that usefulness has to be in-lined with our unique DNA.
Otherwise, we will easily become the victims of our own success!
Again, I am sincerely love and recognize the amount of effort and the intelligence expressed in this article.
But if I ponder on it too long, it will become the source of anxiety and depression.
(Don’t be offend with this comment if you are the 1% of the population)
Good luck!
You are very confident about the future of America as we know it. “Our country is blessed with the size and the freedom no other country in the world will ever have the same fortuity – we are too big to fail and we sit on top of the world shoulder.”
Perhaps the Greeks, Romans, British Empire, and others felt similarly at one time. Our overconfidence could be our undoing.
I can’t argue with your FI numbers, we’re almost there….
Bruce – you left out the word “blessed” that makes all the difference!
When you are fully aware you have a blessed life, you will not take anything for granted due to arrogance, ignorance and sometime downright paranoia!
Instead, you will lead a useful life with passion and compassion – worthy of the blessing!
Good luck with the FI number – as long you have calculated it with your own lifestyle inputs, the number is golden and you will be very happy with it once you have crossed the FI mile marker!
What a refreshingly frank post Sam. A well presented, logical and practical view on the current state of the world, without screaming impending doom, and shining a light on some of the ‘naivety’ that the majority of us believe (myself included at times).
A massive financial crisis where friends and family potentially lose jobs and wealth, along with the negativity that surrounds people through these times, is nowhere near compensation for the unlikely opportunity to truly buy assets ‘on the cheap’.
Great work.
Cheers, Frankie
Ugh! I’m so conflicted. I want to relocate to N. Idaho so I can live closer to my 5 year old son. My intention is to purchase a home in the $350 – $500k range which can get me something nice, and even include 5 acres + at the higher end of my price range.
I can put up to $150k down, but with a recession on the horizon do I wait or just pull the trigger now? I feel that even though we will have a recession, it won’t be anything we’ll all really “feel” like 2009. To be honest, my divorce hurt me more financially than the big recession, LOL.
What advice would you recommend, FS? I’m a 3rd year business owner (I own a niche recruiting agency). 840 FICO. No debt other than a car payment ($343/mo), which a client of mine pays for, and an emergency fund of 1 year’s worth of expenses ($65k).
SEP, Roth IRA I can no longer contribute to due to being past the income limits, and a brokerage acct is my retirement portfolio.
Please wait until January 2020
What makes you say that, Vincent?
Why not rent for a bit first? Check out the area, see what you like, take your time. There’s no rush now as everything is slowing.
I’d absolutely try and live close to your son as possible. That is a priceless win.
You wouldn’t believe how hard it is living in San Diego when my son is in Sandpoint, ID. I’ve been visiting 3-4x a year since he was born going on 5 years now. All I want to do is be there for him and I always feel the longer I wait, the higher chance he’ll turn to someone else or something else for a Father figure.
That said, the rental market is very tight up there. Especially in Sandpoint. I could go further south about 45 mins away and rent in Coeur D’Alene and still be a helluva lot closer than San Diego. Inventory is decent up there right now and things seem to be staying on the market longer. I’m hoping by next spring I could get a good deal fin the mid $300k range for 3bd/2ba.
Steve – with the FICO score of 840, you are financially responsible and secured above the general population. You will not make a bad financial decision rent or buy in N Idaho. But, beware of your lifestyle creeps up due to relationship stresses!
Move to Idaho to be close with your son is the right move and you seemed to have the freedom in movement due to your years of being financial responsible.
Your goal is to be with your son – he will help fill up the relationship voids in your life right now.
Take FS advice on renting something modest just to feel our the place. Your son do not care if he is spending time with you in a $500K home or running around you under a shaded tree in a public park – he just want to be next to you just as you want to be in proximity to him.
The next 5 years is the most precious time between you and your son before he turns 10. Continue to be financially responsible, but invest more time in this relationship.
Good luck!
Honestly a recession is coming. But I remember 1996 and then 1999 where it took three years for it to arrive. I’m certainly peeping for the next crash, but I believe you should always be doing so as they can happen at any time. Ie I’m maintaining my asset allocation and my emergency fund the same as always.
I will tell you five years ago I told my wife the next recession would happen the month I paid off our mortgage. That will happen December. As good a predictor as anything else that. So if it goes in December you can blame me.
Here is the only comment that I might take slight exception too:
“It is clear to me we are currently in the Euphoria/Complacency stage.”
To me, based on past Euphoria stages, the current state doesn’t feel this way. I see more people climbing the proverbial “wall of worry” which is what most bull markets run on. I don’t see euphoric or highly speculative purchase trends in the market right now. I actually see people being cautious, rebalancing portfolios and hoarding cash in anticipation of the next buying opportunity. This just feels to me like the continuation of a secular bull market with an eye on the fact that we will have some kind of recession and normal corrections in the market at some point but nothing that should trigger any kind of panic unless there is a significant shock or geopolitical issue that pops up.
Depending on your time horizon, as long as you are well-diversified and have a solid emergency fund in place, I think this is just a time to sit back and let the market run its normal cycle. At some point, we will “revert to the mean” but just keep dollar-cost averaging for the long haul and rebalance to maintain your targeted allocations and we should all be fine.
But you know what’s different this time around? Central bank balance sheet growth far in excess of GDP growth even if you use the phony government numbers for GDP.
Two important landmarks recently:
Congress wants a dollar devaluation
Central banks should give people money
https://www.ft.com/content/1d1610bc-b500-11e9-b2c2-1e116952691a
This is definitely the last bubble.
Agreed, most unloved bull market ever…this smells like a secular bull market with much more legs.
But will the gains be real? Or just currency devaluation?
I’m a year from retirement and moved a decent chunk of equity money into fixed income just recently. Feel good about my allocation which is 66/24/10 (equities/fixed income/investment real estate). Will eventually get to 60/30/10 in a few years and keep it there.
Watch out for the sequence of returns risk if you are that close to retirement.
If you feel good about that allocation, that’s all that matters.
If I was one year away from retiring after a 10 year bull market, I would be less than 50% equities and more cash.
Sam, when looking at asset allocation, which is the best way to think? Is it best to look at things as the percentage of investible assets or as a percentage of net worth? The reason I ask is that I have fairly healthy home equity and so that somewhat skews my thinking depending on which scenario I am considering.
One way to look at it is to “take the least amount of risk necessary to achieve your goal(s)”. One’s goals are obviously different for everyone. Is your goal to live a good life on your assets? Can you live off 3% (example) of your assets as long as your assets stay relatively stable? Then you will be very low allocated to equities. Is your goal to grow your assets as much as possible for whatever reason – desire, charity, kids, etc? Then you will likely be much higher allocated to equities/alternatives/start-ups/etc. I realize more likely somewhere in between which is why I would only take on the risk necessary to achieve my goals. As I contemplated my exit from the working world (I tweaked my spreadsheet for years), I knew each year I stayed lowered the necessary investment % return to achieve to live a nice lifestyle with less and less investment risk. Again, different for everyone, I knew for my situation each year would lower my necessary return by approx 25-50 basis points. That was very important as I wanted to be prepared should interest rates not go higher/remain low/go lower – and not have to go back to the working world unless I desired. And yes, I stuck to my plan within 1 year…I didn’t stay too long (i.e. the one more year syndrome).
Preach brother. I’m old enough to remember my dad struggling with job loss in the early 80s recession. I’ll never forget waiting in line for those Catholic Church brown bag handouts. Then I graduated high school into the early 90s recession. Then 1999. 2008. Recessions happen. It’s natural.
I’m pretty risk averse so a lot of our money goes into a big cash cushion and rental properties as our main investment strategy. I still invest in the market but it’s just our regular IRA max contributions. What’s your strategy to get through hard times ahead?
My strategy is to follow my Bear Market Checklist To Thriving In A Downturn!
I’ve got a pretty diversified, and defensive strategy. I do wonder whether more people will seek personal finance advice and read personal finance blogs when they are losing a lot of money, or less people.
FI, will real-estate crowd funding and P2P lending vehicles be mostly unaffected by recession?
Yes, I believe all risk assets will be negatively affected. Some more than others. But I think real estate in growing demographic and job growth areas that are low and valuation will hold up better than expensive coastal real estate.
Eye opening charts! I haven’t been following the news very well, so I was very surprised to hear about the Fed rate cut. I definitely didn’t see that coming. I’m not a finance expert, but it does really feel like we’re overdue for a recession. Maybe we’ll just have a brief decline like last December, who knows. I remember feeling nervous last winter when things were looking dicey. I’ll be happy if the markets stay strong, but am trying to be prepared for a market downturn within the next six to twelve months.
Sam – would you be a buyer of real estate now or wait to buy on the cheap?
Depends on your time horizon and what type of real estate. There are more deals now because supply is up.
Winter is always a good time to search, b/c anybody listing then is desperate.
I don’t see prices correcting by more than 15% on average. Some places have already corrected by about 5% up to 10%.
What is your opinion regarding refinancing now or opening a HELOC? Our current rate is at 3.5% on our house and we’re planning to cash out $200,000.00 for adding an in-law/ADU to our home. Also, $100,000.00 will be used for the in-law and the other half will be put in a savings account earning 2.3%. Is it better to refinance doing a 10/1 at 3.5% or open a HELOC?
Refinancing now is an absolute no brainer with the 10-year yield under 1.9%. You should be able to get a 7/1 or 10/1 ARM under 3%. I got one at 2.75%, and that was when the 10-year was at 2.1%.
Taking out a HELOC to build an ADU… not sure. If you had the cash already to build, that’s another thing.
I want more mean & heartless examples – Mean Sam is more entertaining!
Sam – I’ve seen you mention the HYSA versus 10-yr Trs a few times. Won’t these banks, sooner rather than later too, cut the interest rate they are offering. I have two HYSA and both rates have been cut twice since I opened. Still above the 10-yr Trs but at some point in the near term won’t it be lower as the Federal Funds rate keeps getting cut.
Yes, savings rates will eventually get cut down as well. But banks lag. I’m looking at CIT Bank right now and they are still at 2.3% after the rate cut (they did cut from 2.45% a couple months ago). 2.3% vs. 1.9% on the 10-year bond yield is a huge arb opp.
Although I acknowledge your euphoric indicators are pretty good the best indicator I’ve ever seen is the friend indicator. When my friends or family ask me which stocks to buy I know things are going south quick! It happened in 2000, 2007 and more recently with the bitcoin bust. I had 3 calls the week bitcoin blew up. So far I’m not getting those calls so I feel pretty good.
I honestly believe Trump is holding off on a China deal till closer to the election. Combine that with the fed and the fact that you usually get 18 months of gains from the time the yield curve inverts until recession, I’m still pretty bullish for the next year.
Fortunately, I have learned predictions from everyone, “including myself” are worthless. I have a plan if the market goes up or down. Planning I think is the key. Take your emotions out of investing and you should be fine.