Will the Interest Rates Invert & Shortly Thereafter Cause a Recession?
I know there are plenty of you out there that say you can never predict a recession. To just continue investing because none of us are Nostradamus'.
But, and hear me out, what if the signs are all there and you just sit in cash for a little bit to see what happens? I'm not just talking about one thing, but a whole bunch combined. Isn't it prudent to take a step back and consider it?
Personal debt levels are once again at all-time highs, and debt means that future consumption has to decrease to pay it off.
Warren Buffett is sitting on more cash than ever before. Other big investors have been moving to cash as well. These guys are professionals, why not follow their lead?
The Shiller PE ratio is over 30, higher than it was during the 2008 crash and is only lower than just before the Great Recession of 1929 and the Dot-Com bubble.
Unemployment is very low, around 4% currently. Whenever it gets low like this, a recession soon follows.
The 10 2 Treasury Yield is close to inverting. Historically, an inverted yield has preceeded most US recessions. Some say that an inverted yield is the best predictor of economic recessions.
When so many indicators are present, isn't it time to re-evaluate?
I've been moving more to cash and investing less in the normal sectors. Maybe I am wrong and will lose out on some gains. However, silver has been beaten up so much that I see it as a very interesting sector right now. In times of fear, gold may lead but silver often catches up and returns a better gain.
But I am also still in the market with what I have.
I don't know what the future holds, but I want to be ready with some dry powder when it comes.