Cash is key to being a Fat Pitch investor. You need cash on hand when the markets go manic and fat pitches start getting tossed over the plate.
While the S&P 500 has recovered from the dips experienced in August, several key economic indicators are starting to point to macroeconomic conditions that might shift us into a recession. The Treasury yield curve first started inverting in March of 2019. Several studies have indicated that this bond market signal often predicts a recession in 10 to 18 months. Recessions often precede with a steep decline in stock market prices. That’s why I’m cleaning up my portfolio of any stale positions and saving as much cash as I can now.
In addition to the yield curve, several key counties are already in or about to hit recessionary conditions. These global powers include:
- United Kingdom
Given the very connected nature of global economic trade, the recession will likely spread to other countries.
Speaking of global trade, the economic trade war being waged by the president of the United States will likely have substantial impacts on consumers, especially during the holiday shopping period. In addition, political risks will increase in 2020 as we approach the U.S. elections.
There is no reason to panic. Recessions come and go. The key is to be prepared, secure your income sources, and have contingencies. Of course, that’s easier said than done.