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Strategies & Market Trends : US Inflation and What To Do About It
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To: John Vosilla who wrote (1067)8/8/2019 8:06:08 AM
From: RetiredNow  Read Replies (1) of 1504
 
I think that a recession is coming. I know you have been telling me that housing is strong and that you don't see many signs, but most of the indicators I watch are already in recession territory. I think the bond market knows it. As you know, I have been in bonds for two years now and I've seen an average annual return of 6% last year and 7.5% this year. It's absolutely nuts. I'm getting stock like returns with my bonds.

Now, here's my prediction. Stocks will lose 50% or more of their value through the end of this business cycle. I think we're at the peak of the stock market know. It may take a year or even two to lose 50%, but the reckoning is coming. Many will say that bonds are in bubble territory and they'd be right. Many will say bonds will lose a lot of value as the air comes out of them just as it comes out of stocks. I think they will be wrong on that score. The Fed is going to be forced not just to lower rates to zero or close to it, but they will also be forced to restart QE before the end of this upcoming recession. Bonds in the US may get to zero or negative yields by then. Bonds have been on a tear for two years and they can continue to get pricier before it is all over.

So my call for now. I'm 100% in bonds and continue to be long on bonds. I'll stay in until I see the recession in plain sight and the Fed has announced a restart of QE. Then I may start to sell into that final rally and blow off top in bonds. As for stocks, I'm out of stocks for the foreseeable future, until the recession monkey hammers them down to 50% of current prices.
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