8 Things To Do When Recession Happens

Yeah it is not a matter of IF but WHEN the next recession will happen.  Sorry.  You could go ride a roller coaster to get your mind off of it.  Or you could do these things.

rollercoaster

Recessions occur every 4 to 8 years in a society with capitalism and little regulation.  And since the last one was in 2008….

Here’s what you should do.

1. DON’T PANIC – Stay calm.  Most people will be doing one thing – panicking. You won’t.

2. THINK, THINK, THINK – Be smarter than the rest. Know when to sell, when to buy and, like Kenny Rogers, when to hold.

3. SET UP ALERTS – Get an E*Trade or other brokerage account and set up messages when Dow (DJIA) goes up 3% or goes down 3% in a day.

4. RECALIBRATE AT NOON EASTERN TIME – If you have time, think about your next sell or buy of what and for how much before the market closes.

5. IF UP, SELL – When there is a jump up in stocks, sell your stock and funds 25-35% at a time.  You may have to wait to use the money.   Time is on your side.

6. IF UP AND GOLD IS DOWN, BUY GOLD – Gold usually moves opposite of stocks, so buy gold or gold mining funds such as NEM which will move up when stocks crash.

7. IF UP, BUY SHORTS – Shorts are stock buys that you expect to go down.  Pick losers on purpose.  Also choose bearish ETFs such as PILS and TECS that rise if the stock price of pharmaceutical or tech companies goes down.

8. IF DOWN, WAIT – Remember we agreed to not panic.

There will be four 400+ gains or losses of the DOW before a recession happens.  Anybody can take advantage of them. And I know you will. (There have been 4 days in August and September 2015 with over 400 point ups and downs.)

Or you can go ride a roller coaster to get your mind off of the market’s ups and downs.

P.S. I care about you, but can’t be held responsible for your results.

Revised: 04/10/2016 DUG is volatile since oil producers are considering fixing output quantities.

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Wall Street Goes Frothy – No Not Starbucks

I am talking about huge swings in the market.

swing

No, not that type of swing.  I am talking about the huge daily changes in market value.  See the chart below courtesy of bigcharts.marketwatch.com.

djia_frothy

Specifically, this chart shows huge daily changes in the Dow Jones Industrial Average (DJIA) during the week of Sept 22-26.

Monday 9/22 down 105

Tuesday 9/23  down 100

Wednesday 9/24 up 150

Thursday 9/25 down 250

Friday 9/26 up 167

The summary is the market is frothy.  Why?  Because the QE3 is winding down, the economy is still struggling and the financial sector has been over stimulated.  Thus there is a lot of nervousness.

The conclusion: we are overdue for a big correction.

Wall Street Open 24 x 7

Banker’s hours are so 19th Century!  We are talking about stock exchanges being open ALL DAY Monday through Friday!  That is my prediction.

wallstreet24x7

This has several advantages to the general public.

First, I predict that you will be able to buy or sell stock at any time (except weekends)  just like buying a book at Amazon.com.

After-hour trading has gradually increased over the years as stock markets make more stocks available for trade.  Also stock exchanges have experienced mergers and acquisitions involving exchanges in other countries.  So the exchanges are becoming international which requires support for many different time zones.

Secondly, no longer will institutions sneak in sales “at the close” or use “imbalance only orders” to modify the closing price.

Institutions have been using these “at the bell” prices when convenient or they cancel them if they won’t be profitable.  This distorts the market price.

So 24 by 7 stock exchanges are good for the general public but bad for corporations.  So it may be a while before we see them.  Probably after some huge foreign corporation implements them.

When Kids Ask What GOP Stands For

I tell them it means “Government Obstructionist Party”.

GOP

They shutdown the government rather than pass a budget and raise the debt ceiling.

Consequently the economy lost $24 billion dollars for the quarter.

And the Congressional members did not lose a dime of income during this shutdown.

Here is a list of names of the 144 obstructionists that voted NO on the House of Representatives bill that raised the debt ceiling.  All of them are members of the GOP.

http://politics.nytimes.com/congress/votes/113/house/1/550

Here is a quote to think about.  “The extreme right has 90 seats in the House,” Mr. Echevarria, CEO of Deloitte, said. “Occupy Wall Street has no seats.”

Please make a note of these for the 2014 election so we can even the score.

Wall Street Crash Could Happen Again

On April 8, 2013 new more sophisticated Securities and Exchange Commission rules seeking to prevent another flash-crash tookeffect, but some observers are dubious about how effective they will be in another crisis-situation.

On August 1, 2012 the Knight Capital Group had a $400 million trading snafu.

On May 6, 2010, the Flash Crash occurred where the Dow Jones fell 9.2% in a matter of minutes.  Finally a short story that explains how it could have happened and how it might happen again. 

Computer_room

Click on Flash Crash Epitaph  to read this short story.  Enjoy!