by Bill McBride on 6/10/2013 12:32:00 PM
Monday, June 10, 2013
Just an update: Back in March I wrote: Business Cycles and Markets . In that post, I pointed out that IF an investor could predict recessions and recoveries (even without being precise), they could significantly outperform the market.
I also pointed out that calling recessions and recoveries is NOT easy. A recent example would be ECRI's recent series of incorrect recession calls. If investors sold when ECRI first made their recession call in Sept 2011, they would have a missed around a 40% increase in the market!
For an investor, one bad business cycle call like that would wipe out most of the advantages from trying to time cycles.
Of course I disagreed with ECRI's recent recession call (I disagreed with their incorrect recession call in 2011 too - I wasn't even on recession watch then and I'm not on recession watch now).
One of my goals with this blog is to try to call the next recession, but I don't think that will happen for some time. Right now I'm optimistic on the economy, especially once most of the fiscal drag is behind us. Of course I might miss the next cycle - no one has a crystal ball.