Back on April 4, 2019, I published a blog entitled, Should You Yield to the Yield Curve? I was commenting on the fact that for the 1st time since 2007, the US Treasury yield curve had inverted. Since then this yield curve inversion theme has cropped up over and over again.
What is the big deal?
The yield curve is one of several indicators used attempt to predict the future used by RBC Wealth Management and other leading research organizations. It is now flashing red for recession (see page 3 of August 15, 2019 Global Insight Weekly). Mind you, it is the only one of six; the other five are still flashing green. And remember, it is a potential warning with an imperfect ability to tell us when a recession will arrive and for how long it will last.
Uncertainty is the norm but it feels like we are heading into an era of increased uncertainty. Doesn’t it?
We have experienced an increase in the number of days that the stock market is trading down vs up.
What are we doing about it?
We are monitoring the situation and case by case making suggestions.
What should you do about it?
I will reiterate what I said in the blog post of April 4, 2019, STICK TO YOUR PLAN!
- Have or create a wealth strategy.
- Spend your money consciously.
- Keep cash on hand for your major expenditures within the next 18 months.
- Develop an investment strategy to fit your needs and your risk tolerance.
- Diversify globally.
- Manage investment costs (ie MER, Trading costs, Turnover costs, and Taxes).
- Stay disciplined throughout market ups and downs.
- Be ready to take advantage of the opportunity to buy ‘on sale’.
Reach out to us if something has changed in your personal circumstances.
Here are a couple of additional references for you:
https://www.economist.com/leaders/2019/08/17/markets-are-braced-for-a-global-downturn