Education - Member Q&A

This website offers three (3) user-driven Question & Answer features. One is exclusively focused on questions related to our flagship newsletter product and only for subscribers. The FAQ (Frequently Asked Questions) feature also available in the Education menu is mostly for website use and general customer service questions. But THIS one is for ALL followers -- subscribers or not -- and is focused on investor-driven educational topics.


Our followers ask questions. We differ from many competitors by LISTENING and trying to answer up to every question. Sometimes the answers are better suited for delivery in an existing or future special report, webinar of investing insight topic. Sometimes the questions better fit in one of the other Q&A features. However, when we are asked a question that -- if answered well (which is the only way we do it) -- will be of interest to our followers as a whole, it very well may be posted here as soon as we can. Below find a batch of recently-asked questions and well-developed, all-original answers. Click the question bar to reveal the answer. Click another question bar to close one question and open another. 


How long and severe do you expect this recession to be?

While no one has a crystal ball, including us, we do have proven economic indicators that help us forecast the economy. 

Based on these indicators, we believe the coming recession is likely to be one of the longest-lasting and most severe recessions in the past century. 


Consumers Are Struggling

One reason we expect a rough recession is because the American consumer is already in a very weakened position.

Thanks to the Fed’s unprecedented 40% increase in the money supply in response to the government’s panic over the covid virus, the American people are suffering from the highest inflation rates in 40 years and the big increase in interest rates over the past couple of years. This has caused a drop in household incomes and an increase in poverty rates from pre-covid levels, as this chart shows.


Income and poverty


Americans also have little financial buffer to sustain them in an economic downturn. The personal savings rate is now near historical lows at 3.5%, as this next chart shows. It is only one-third the level it was at before covid and is similar to the levels it was at heading into the Great Recession of 2008-2009.


Savings rate


A recent Federal Reserve study shows that the bottom 80% of households in terms of income have less savings now than they did before covid, as this next chart shows. They estimate that “a relatively small amount—around $190 billion—remains in the overall economy, and we expect the aggregate stock of excess savings will likely be depleted during the third quarter of 2023.” That is now.


Excess savings


This is one reason why most consumers are planning to cut their discretionary spending over the coming six months, as this table shows.


Spending plans


In other words, consumers are already struggling significantly heading into the upcoming recession.


The Rise In Interest Rates Has Been Historic…And Not In A Good Way 

Another reason we expect a long and deep recession is because of the historic rise in interest rates and its impact on key economic indicators.

Due to the rapid increase in short-term interest rates, the yield curve spread between long-term rates and short-term rates has been negative for the longest period of time in 40 years, as shown below. A negative or “inverted" yield curve spread has a perfect track record in predicting — and causing — recessions over the past several decades. Typically, the longer the yield curve inversion, the longer and deeper the recession. 


Yield curve


Another important sign that the coming recession will be severe is that the Conference Board’s Leading Economic Index has been declining longer than in any period in the past three decades outside of the Great Recession. That is not encouraging, to say the least.


LEI


Lastly, this chart shows that historically the greater the increase in the Federal Funds rate, the greater the subsequent decline in economic activity, as represented by manufacturing new orders. 


Rates PMI

Source: Trahan Macro Research LLC


Since the 5%+ increase in the Federal Funds rate over the past 18 months has been one of the largest and fastest increases in modern history, that suggests the coming recession will be one for the record books, as we first warned about back in the summer of 2021. Wise investors should be prepared.




FREE WEBINAR ON "FORECASTING THE ECONOMY"

Our latest Members-only webinar is titled “BULL AND BEAR PROFITS STEP 2: FORECASTING THE ECONOMY". This is the second of four webinars where we discuss in detail our four key steps for profiting in bull and bear markets. This webinar focuses on the most important leading economic indicators for predicting the boom and bust business cycle.

Understanding how to forecast the economy, which even the Fed and most professional investors do not know how to do, will be incredibly powerful in helping you build conviction to prepare for and profit from bull and bear trends in all assets. It is on the “BULL & BEAR WEBINARS” page here: https://bullandbearprofits.com/Education/Bull-and-Bear-Webinars.aspx

How can there be a recession with employment still growing?

You must be a registered user to view this answer. Register for FREE here.

Given the current seemingly mixed signals in the markets, what should a prudent investor should do?

You must be a registered user to view this answer. Register for FREE here.

What is the best stock index to monitor for bull and bear trends?

You must be a registered user to view this answer. Register for FREE here.

What do current stock market valuation levels imply for future returns?

You must be a registered user to view this answer. Register for FREE here.

What will the likely impact be from the US credit rating downgrade?

You must be a registered user to view this answer. Register for FREE here.

What are the implications of the latest Fed rate hike and inflation data?

You must be a registered user to view this answer. Register for FREE here.

What are key economic metrics telling us now about a recession?

You must be a registered user to view this answer. Register for FREE here.

What are the investment implications of the latest employment report?

You must be a registered user to view this answer. Register for FREE here.

What is the outlook for Fed rate hikes going forward?

You must be a registered user to view this answer. Register for FREE here.

What are the implications of the latest CPI report for the stock market outlook?

You must be a registered user to view this answer. Register for FREE here.

Why is China lending so aggressively to developing countries and what is the likely outcome?

You must be a registered user to view this answer. Register for FREE here.

What are the most important recession indicators to focus on now?

You must be a registered user to view this answer. Register for FREE here.

Can NVIDIA and AI prevent a bear market?

You must be a registered user to view this answer. Register for FREE here.

What does the latest retail sales report tell us about the economy?

You must be a registered user to view this answer. Register for FREE here.

What does the latest jobs report say about the employment outlook?

You must be a registered user to view this answer. Register for FREE here.

Why is money supply growth important and what is it telling us now?

You must be a registered user to view this answer. Register for FREE here.

Who will likely suffer most from the current banking crisis?

You must be a registered user to view this answer. Register for FREE here.

What is the likely success of BRICS countries to replace the dollar and what are the implications for the US?

You must be a registered user to view this answer. Register for FREE here.

Since balance sheets are healthier than before the Great Recession, won’t this recession be mild?

You must be a registered user to view this answer. Register for FREE here.

Will the banking crisis cause the Fed to “pivot” and cut interest rates?

You must be a registered user to view this answer. Register for FREE here.

What do you make of Fed Chair Powell’s recent comments?

You must be a registered user to view this answer. Register for FREE here.

What are the implications of the recent stock market selloff?

You must be a registered user to view this answer. Register for FREE here.

What are the economic and investment implications of the latest inflation data?

You must be a registered user to view this answer. Register for FREE here.

Do you expect a global recession, as well as a US recession?

You must be a registered user to view this answer. Register for FREE here.

Is this stock market rally the beginning of a new bull market?

You must be a registered user to view this answer. Register for FREE here.

How are investment opportunities different between bull and bear markets?

You must be a registered user to view this answer. Register for FREE here.

What are the implications of the December employment report?

You must be a registered user to view this answer. Register for FREE here.

What is the current outlook for US home prices?

You must be a registered user to view this answer. Register for FREE here.

What are some low-risk investment alternatives with a decent return?

You must be a registered user to view this answer. Register for FREE here.

What do you think of the market’s reaction to Powell’s recent comments?

You must be a registered user to view this answer. Register for FREE here.

Are there any signs a US recession has ALREADY started?

You must be a registered user to view this answer. Register for FREE here.

What is the best indicator for anticipating and trading bear market rallies?

You must be a registered user to view this answer. Register for FREE here.

When do you expect the Fed to “pivot” and cut interest rates?

You must be a registered user to view this answer. Register for FREE here.

Vanguard will only allow me to profit from bear markets by trading options. Suggestions? Can you manage my money?

You must be a registered user to view this answer. Register for FREE here.

Is it a good time to invest in real estate if higher inflation and interest rates cause a higher demand for renting?

You must be a registered user to view this answer. Register for FREE here.

Given OPEC’s recent oil production cut, do you still believe oil markets have more bear market downside to come?

You must be a registered user to view this answer. Register for FREE here.

What do you think about buying Palantir Technologies (PLTR) stock right now?

You must be a registered user to view this answer. Register for FREE here.

What do ETF investors need to know about K-1 tax forms?

You must be a registered user to view this answer. Register for FREE here.

What caused the current high inflation and what did the Fed do wrong?

You must be a registered user to view this answer. Register for FREE here.

What does the European energy crisis mean for investors?

You must be a registered user to view this answer. Register for FREE here.

What do you think about investing in Gold Mining stocks now?

You must be a registered user to view this answer. Register for FREE here.

Do you think Bitcoin is likely to fall to new lows?

You must be a registered user to view this answer. Register for FREE here.

What is Quantitative Tightening and how will it impact financial markets?

You must be a registered user to view this answer. Register for FREE here.

What are the best and worst stock sectors in a bear market?

You must be a registered user to view this answer. Register for FREE here.

How have your forecasts worked out over the past year? (Part 2)

You must be a registered user to view this answer. Register for FREE here.

How have your forecasts worked out over the past year? (Part 1)

You must be a registered user to view this answer. Register for FREE here.

How can you use volume as a technical indicator for investing?

You must be a registered user to view this answer. Register for FREE here.

What problems are caused when banks create money out of thin air?

You must be a registered user to view this answer. Register for FREE here.

Are dividend growth funds a good long-term investment at the moment?

You must be a registered user to view this answer. Register for FREE here.

What do you think of Yellen’s comments that we will not have a recession?

You must be a registered user to view this answer. Register for FREE here.

Do stocks always outperform T-bills and inflation in the long run?

You must be a registered user to view this answer. Register for FREE here.

Are inverse ETFs worth considering as investment vehicles?

You must be a registered user to view this answer. Register for FREE here.

Any thoughts on Bernanke’s recent inflation and recession comments?

You must be a registered user to view this answer. Register for FREE here.

Is Bitcoin or gold a better inflation hedge now?

You must be a registered user to view this answer. Register for FREE here.

Does the negative GDP report mean we’re already in a recession?

You must be a registered user to view this answer. Register for FREE here.

Will the next bear market be one big disaster or a series of crises? And what will the Fed do about it?

You must be a registered user to view this answer. Register for FREE here.

Is the Fed really trying to crash the housing, bond and stock markets?

You must be a registered user to view this answer. Register for FREE here.

Given inflation and bear market risks and opportunities, how can those of us with 401k retirement accounts invest, given our limited alternatives?

You must be a registered user to view this answer. Register for FREE here.

What is different between now and the 2020 stock market crash?

You must be a registered user to view this answer. Register for FREE here.

In your “Stocks & Commodities” article, there were 4 times since 2009 that met your “sell short” criteria but were not major bear markets. Thoughts?

You must be a registered user to view this answer. Register for FREE here.

Inverse ETFs providers say the holding period should be no longer than a single day. How long do you hold these?

You must be a registered user to view this answer. Register for FREE here.

What are credit markets telling us now about stocks and ETFs?

You must be a registered user to view this answer. Register for FREE here.

What impact will the Russia/Ukraine war have and is the stock market correction over?

You must be a registered user to view this answer. Register for FREE here.

How are major ETF asset classes looking on your Trend and Trade analysis?

You must be a registered user to view this answer. Register for FREE here.

What does the latest inflation report mean for interest rates and the economy?

You must be a registered user to view this answer. Register for FREE here.

Is the stock market rally over?

You must be a registered user to view this answer. Register for FREE here.

What do your measures of stock market sentiment and internals tell us about the outlook for stocks and ETFs?

You must be a registered user to view this answer. Register for FREE here.

What are technical trend lines telling us now about stocks and ETFs?

You must be a registered user to view this answer. Register for FREE here.

Is it better to invest in Growth or Value stocks now?

You must be a registered user to view this answer. Register for FREE here.

What is the best indicator to determine if a stock or ETF is “overbought” or “oversold”?

You must be a registered user to view this answer. Register for FREE here.

What can the “Santa Claus rally” and “January Barometer” tell us about the outlook for the stock market in 2022?

You must be a registered user to view this answer. Register for FREE here.

How will the latest Fed announcement to fight inflation impact stocks and ETFs?

You must be a registered user to view this answer. Register for FREE here.

What is the VIX, why is it important and what is it telling us now?

You must be a registered user to view this answer. Register for FREE here.

How will new Covid variants impact the economy and stock market?

You must be a registered user to view this answer. Register for FREE here.

What do you think about investing in TIPS versus traditional Treasury bond ETFs given high inflation?

You must be a registered user to view this answer. Register for FREE here.

What are the implications of high inflation for stocks, ETFs and the economy?

You must be a registered user to view this answer. Register for FREE here.

Are we in another housing bubble?

You must be a registered user to view this answer. Register for FREE here.

Why is EPS growth so important in stock investing?

You must be a registered user to view this answer. Register for FREE here.

What can stock and ETF investors learn from the fact that Japan’s stock market is still well below its highs of 30+ years ago?

You must be a registered user to view this answer. Register for FREE here.

Do you think the economy is heading towards “stagflation”?

You must be a registered user to view this answer. Register for FREE here.

Your MarketWatch.com interview seemed very bearish. Are there any stocks or ETFs you recommend buying right now?

You must be a registered user to view this answer. Register for FREE here.

Shouldn’t stock and ETF investors focus on current money supply growth, since it drives the economy and stock market?

You must be a registered user to view this answer. Register for FREE here.

Why shouldn't investors just follow the simple Wall Street rule of “don’t fight the Fed”?

You must be a registered user to view this answer. Register for FREE here.

How can you make money — instead of lose money — in a major bear market with ETFs?

You must be a registered user to view this answer. Register for FREE here.

How important is stock market seasonality for stock and ETF investors, particularly in September and October?

You must be a registered user to view this answer. Register for FREE here.

How concerned should stock and ETF investors be about margin debt levels?

You must be a registered user to view this answer. Register for FREE here.

Are US Treasury Bond ETFs safe long-term investments?

You must be a registered user to view this answer. Register for FREE here.

What are the key characteristics of winning stocks?

You must be a registered user to view this answer. Register for FREE here.

What are the best and worst trending stock sector ETFs right now?

You must be a registered user to view this answer. Register for FREE here.

What is the likelihood the next bear market and recession will be even worse than the Great Recession of 2008-2009?

You must be a registered user to view this answer. Register for FREE here.

What impact will the US government’s stimulus package have on the economy and stocks?

You must be a registered user to view this answer. Register for FREE here.

I've never invested before in my life. How do I start?

You must be a registered user to view this answer. Register for FREE here.

How do you place a GTC and T-Stop order?

You must be a registered user to view this answer. Register for FREE here.

What is wrong with a “buy and hold” or “asset allocation” investment strategy?

You must be a registered user to view this answer. Register for FREE here.

Why is it so important to keep investment costs low on stocks and ETFs and how can that be done?

You must be a registered user to view this answer. Register for FREE here.

What is the best way to invest to retire early?

You must be a registered user to view this answer. Register for FREE here.

What are the best ways for investors to profit from stock bear markets, such as the 2008-2009 Global Financial Crisis?

You must be a registered user to view this answer. Register for FREE here.

What are the historical long-term returns of stocks, bonds, bills, REITs, housing, gold, commodities and inflation?

You must be a registered user to view this answer. Register for FREE here.

How can technical analysis be helpful to profit from bull and bear markets in stocks and ETFs?

You must be a registered user to view this answer. Register for FREE here.

What is the primary cause of bull and bear markets in stocks and ETFs?

You must be a registered user to view this answer. Register for FREE here.

How do you use economic indicators to determine the outlook for the economy, stocks and ETFs?

You must be a registered user to view this answer. Register for FREE here.

How can you estimate the long-term returns of stocks, bonds, REITs and other financial assets?

You must be a registered user to view this answer. Register for FREE here.


A CALL FOR MORE QUESTIONS

If you have a good question likely to be of interest to Bull And Bear Profits followers as a group, first check to see if the topic might be covered in any of the other educational features. If not or if you are unsure, don't be shy about scrolling back up to the top right of this page and clicking the orange "Ask a Question" button to submit a new one.


We try to cover EVERY single topic asked ASAP as long as it likely to be or broad interest to our followers as a group. As a publisher and not an investing advisor, we are not allowed to offer individualized advice specific to any one person. 


This Member Q&A feature is focused on investor education. We also have a separate Frequently Asked Questions section for customer service and website usage questions. Special Reports, Webinars and regularly-posted, Investing Insights are all places where many questions are covered in depth. And our own Stock & ETF Education Course covers rich information for less-to-moderately-experienced investors and traders too.


We hope you enjoy working with a team committed to helping individual investors prosper without the Wall Street biases of commissions & hidden fees that so often benefit big banks at the expense of the individuals. Our model is entirely different -- we're with YOU 100%.