I have various family commitments today that have given me a short window to work. This will be short and sweet.

You can find the research portal I am building in public here.

S2N Spotlight

In this chart I show the before and after of the last 13 recessions in the US.

The official start of the recession is where the grey vertical line intersects the 0 point on the x-axis. What people often forget is that this official announcement of when the recession starts happens around 180 days after the recession in fact starts.

I have therefore added a red vertical line when the actual announcement takes place. What you can see with the black line is the average performance of the S&P 500 trends down until the announcement of the recession and then starts to, in fact, trend upwards from the time of the announcement.

The time to be short or underweight stocks is before the announcement is made and long when the announcement is made.

Why am I saying all of this?

Global trade, especially between the US and China, has fallen off a cliff. Of course you are not seeing this fall in the reported earnings and economic releases; that is because there is a lag effect. Don’t say you haven’t been warned. You need to take action with the lag effect in mind; don’t react to the news of the day.