Does This Signal Mean Stocks Will Crash Soon?
Almost every week of every year, somebody on television or in the media says stocks are going to fall hard.
Warren Buffett doesn’t listen.
He never sells based on his forecasts or anyone else’s. His favourite holding period is “forever.” Economists have predicted about 100 of the past 3 market crashes. If you acted on even 10% of such predictions, you would never make money.
Nobody can see the future.
The latest such warning relates to something called the inverted yield curve*. It’s supposed to signal an upcoming recession. It’s supposed to have a perfect track record signalling recessions.
But does a recession means stocks will fall? Nobody REALLY says that,
Image by Pixabay
* Definition from Investopedia: An inverted yield curve is an interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality.