Confirming Evidence Everywhere You Look

Earlier this month I was reading a quarterly market update from a financial institution that was citing leading economic indicators that were all pointing to a looming recession and likely market decline in the near future. And there was convincing evidence to support this – since 1960, whenever leading indicators got to this level (see the red line below), we had a recession (see the grey bars below).  

Later that same day, I came across a chart from a market strategist at a large financial institution that cited the fact that since 1950 when we reach a 52-week high after more than a year without one, the market has been positive 1 year later every time.  

So, which one should you believe? I suppose most investors who are pessimistic will cling to the former while optimistic investors will choose the latter.  

The reality is that there is never any certainty in investing. Records, both good and bad, are broken every year in the stock market.  

My suggestion – have an investment portfolio that will benefit if the stock market goes up and can survive when the stock market inevitably falls.  

Happy Planning, 

Alex 

This blog post is not advice. Please read disclaimers.