The Inverted Yield Curve and the Economic Machine

March 27, 2019 Top Reads

The Inverted Yield: Clearing up Misconceptions

We wrote up a comprehensive primer on the significance of the yield curve inversion. Every inversion (with one exception) has been followed by a recession. But you might be surprised to discover that stocks often rally double digits in the ensuing months.

Don't Wait for a Dip

If the headlines are giving jitters, you may feel tempted to take money out of the market and wait for a dip to reinvest. First, you need to read The Powerful Reasons Why Marketing Timing Will Cost You Money. The author backtests what would have happened if investors were to wait for the S&P to drop 15% from its previous 5-year high before investing. Spoiler: Over 70% of the time, you would have made out with more money had you not waited for a dip in the future

Economic Cycles Explainer

We keep saying we're in the late stages of a bull cycle. Ray Dalio's simple but deep 30 video on the economic machine explains the driving forces of the economy. He does a particularly good job breaking down how and why economic cycles occur.

Preparing for the Next Recession

The next recession is not a matter of it, but when. In How to Prepare for the Next Recession Before it Arrives, J.D. Roth outlines five tangible ways to get your financial house in order. We particularly agree with the advice to reconsider major purchases (like upgrading to a bigger house) in light of where we are in the economic cycle. Editor's Note: I'm excited to announce some changes at Rockstar Finance!