the majority of economists and analysts

were expecting a recession in 2023 they

said it was inevitable Market is going

to crash well it didn't happen so what

they're now saying is that it's because

it's been delayed that the effect of the

interest rate high will whack the

economy in 2024. so could this happen

could we have a recession in 2024 and as

investors how can we prepare for this

recession

[Music]

so once again the majority of economists

and analysts are predicting a recession

will hit the U.S market and economy by

the end of this year or by next year and

of course the media is playing this up

in just the last few days we've got all

these headlines and recession is in

America by 2024 looks very likely and

then on Bloomberg it says stocks

recession warning as psychic girl stocks

go down trouble spreads to Industrials

all right and again this is a list of uh

the banks and their predictions and as

of now again the majority of economists

and banks are predicting a recession in

the next 12 months they are a minority

like Bank of America Goldman Sachs JP

Morgan that are predicting no recession

so again majority recession minority no

recession so who's going to be right so

the first thing to understand is if you

go back to history

you have to know that economies are very

very bad at forecasting recessions and

it's not their fault it's because there

are just too many moving parts that

cause a recession or that avoid the

recession it's kind of like the Weather

Service The Weather Service is very

difficult for them to predict the

weather because again there are just too

many unknowns and uncertainties that are

changing all the time so I'm not saying

that we can predict any better than them

we can't so if these you know smartest

economies in the world can't predict a

recession you know what chance do we

have who are not economists right in

fact a research study found that from

1992 to 2014 over the last 23 years out

of

153 recessions that occurred in 63

countries guess what only five were

predicted by a consensus of economists

in April of the preceding year

so in other words when you know most

economies don't expect a recession it

happens and when most economies expect a

recession it doesn't happen it's kind of

like when you look at the future it

changes the future if everyone expects a

recession they tend to take

measures to avoid a recession it's like

if you know you'll be hit by a car

tomorrow at this road you will not go to

that road and not get hit by a car

my recession tends to hit uh when we

least least expect it it's like you get

hit by a car when you don't expect

getting hit by a car right that's the

whole point so what can we do as as

individuals so again it's really hard to

predict recessions but there are certain

leading indicators where historically it

is found to have a higher probability of

anticipating recessions and of course

all of you have heard about this famous

yield curve inversion so in fact that's

one reason people are saying that the

yield curve is so inverted right now

that there has to be a recession because

historically every time you get a yield

curve inversion a recession occurred

again it's not 100 but often times it is

so let's take a look at the yield curve

now there are some people who compare

the two-year treasury yield with the

10-year treasury yield but the inventor

of this yield curve inversion predicting

recessions Harvey Campbell he himself

said you should actually use the

three-month treasury yield versus the

tenure because that is more sensitive

and more accurate so on this chart over

here you can see this shows you the

10-year treasury yield minus the

three-month treasury yield so in other

words if the 10-year minus a three year

if it is below zero that means that the

yield curve is inverted

if it's above zero it is uninverted so

many people think that when it gets

inverted

then a recession will occur right well

not really true is when the yield curve

inverts and then uninverts then a

recession follows so let's take a look

at this chart and you see what I'm

talking about so over here you can see

this blue line goes below the zero line

which means that the yield curve is

inverted which means a three-month

treasury yield is above the 10-year

treasury yield right and then what

happens after it goes below zero it goes

above zero over here so this is called

uninversion so when it goes back above

zero

recession happens which is in grade so

this great period would be the recession

now then the next time same thing so U

curve inverts over here

and then it uninverts in January 2001

and then boom the recession comes which

is in green and then over here same

thing uh treasury yield curve inverts

over here and then uninverts and then

recession okay let's look at the last

one which was the uh covet crash so

again yield curve inverts

onion verts and then we had a recession

a very very short recession back in

2020. so where are we right now so right

now we can see that yeah the yield curve

is inverted and it's extremely inverted

it's the most inverter over the last uh

30 30 40 years so that's what's freaking

people out but again has it uninverted

yet not yet so when this blue line gets

back above that zero line when it

uninverts then yeah maybe a recession

may follow but we're not there yet so

what if we get an uninversion signal in

the next few months what should we do

should we like sell all our stocks and

get off the markets because the

recession is coming well let's take a

look at the last one two three four

occurrences and let's see uh what we can

learn from that and whether we can use

this to predict when to get off the

markets and get back into the markets

right so let's begin with the first one

which is August 1989 when the ukuf

uninvent that's it right let's take a

look at that okay so there we are so

over here you can see this is the S P

500 and right here we had the yield

curve and invert over here all right so

once it uninverts it

um when did the so-called Market start

going down into a bear Market the market

started going down was it immediately no

it went down 11 months later right so 11

months later it then went into a bear

market and this bear Market was actually

a very short bear Market it lasted only

three months and then it went up again

okay

um and interestingly enough the bear

Market started right there in July of

the following year and that was exactly

when the recession started as well

so it's pretty interesting because

sometimes the bear Market

starts before the actual recession and

sometimes the bear market and recession

starts at the same time and sometimes

the recession comes first and a bear

Market comes later on so it it's not

always the same in every situation right

and you can see that from the moment of

an inversion

the market still went up seven percent

before getting into that bear market so

some of you may look at this and say

okay I know what to do once the yield

curve uninverts I will sell all my

stocks in 11 months right wait 11 months

I sell all my stocks and I get out and

then I buy back again uh when it gets

lower now of course the problem is that

it doesn't always go down 11 months

later every situation is different right

and the other problem is that if you had

say sold everything right there if you

were Clairvoyant and you could sell

everything at the top the problem is how

you know when to buy it back because a

lot of people say I want to buy back

lower and when it goes lower they think

that no it's going to go even even lower

right and they say I want to wait but

you know but by the time before they buy

it shoots up again and in the end they

miss out

on all this upside because of the need

to avoid that short-term uh bear Market

by the way this bear Market went down

exactly 20 and reverse backed up okay so

that was the first

um one now the next one let's take a

look at look at the next one

uh this happened uh here right so yield

curve went down re-inverted or

uninverted in January of 20

or one so this scenario played out a bit

differently so the yield curve

uninverted in January of 2001 and the

recession started two months later in

March of 21. but by that time the bear

Market was already enforced in fact the

bear Market started in March of the

previous year in 2000 so in other words

by the time the U curve uninverted the

market was already down seven percent

but then again if you saw this inversion

or uninversion if you will and you you

know got out of the market yeah you

could have saved quite a bit of downside

from there where the market went down a

further about you know 30 30 40 and this

bear Market lasted pretty long about 31

months but of course with all bear

markets they come to an end and then

that led to the next bull market so

again

in this particular instance we say all

right the moment it uninverts I get out

yeah so again every scenario is

different so you know could there be one

thing that we do

that would work we'll explore it in a

while but I want to show you all the

different scenarios so you see that

everyone is different the next scenario

would be this one this was the inversion

and then uninversion in May of 2007 so

let's look at that one so this one the

yield curve uninverted here may 2007

and then the bear Market started

five months later in October 07 so from

the uninversion to the market going down

it still went up another four percent

after that and then the recession

officially began in December of 07 which

was um

seven months later right and then that

led to the great financial crisis where

the market dropped over 50 percent

lasted 17 months but again every bear

Market comes to an end and that would

then lead to the next two Market that

makes everything back and a whole lot

more yeah

so again slightly different scenario now

let's look at the fourth one which was

just a few years ago uh you curve

inverted uninverted in October 2019 so

how how did that one play out so that

one played out again differently yield

curve uninverted in 2019 October and

then the bear Market only started four

and a half months later right there so

the bear Market started in February 2020

the recession started

at the same time in February 2020 as

well and then we had a very short and

sharp bear Market that lasted one month

and then again a great uh bull market

recovery and from the time of

uninversion to the recession starting

bear Market starting the market went up

another 13 so in summary you can see

that the yield curve went uninverted me

anticipated recession but it doesn't

really tell you when the recession will

start or when the bear Market will start

so sometimes when it uninverts the bear

Market starts five months later

sometimes 11 months later and sometimes

it happens even before the uninversion

so as investors what can you do about it

so there are few things you can do

number one if you're holding on to great

companies or the index you can simply

ignore the short-term Market Cycles in

other words just hold through the bamboo

markets because over time you will do

very very well now some of you may say

but the bad Market it goes down for two

years I want to be able to like get out

and get back in sure you can do that as

well so one of the things that you could

do is that once the U curve

and inverts

it doesn't mean you have to get out

straight away you can watch the trend of

the market right as long as the market

remains on an uptrend you stay in the

market but once the market reverses into

a downtrend then you could you know sell

your stock if you want to or you could

hold your stock and then buy a lot of

put options to kind of like ensure your

portfolio so how do we know an uptrend

has reversed into a downtrend how do we

confirm the trend reversal well there

are many methods and for those of you

who have been following my methods for

many many years you know that one method

I use is called the 50 and 150 moving

average crossover technique let's take a

look at that so first let me orientate

you this blue line that you see there

that's a 50 moving average the green

line is the 150 moving average so when

the 50 moving average the Blue Line

crosses below the green line and they

start to slope down that is a confirmed

downtrend and when the 50 blue line

crosses back above the 150 green line

and they start to slow up they both

slope up that's a new uptrend

confirmation so you have to look at the

crossover and the slope of the moving

average to confirm the change in Trend

so let's see how we could have applied

it to this scenario back in the 2000s

right so you can see

over here uh we had sorry in blue right

in blue we had the uninversion so this

is when the yield curve uninverted all

right and the recession started here but

the bear Market actually started

earlier it started over there so the

moment you see the uninversion and that

hey we're in a bear Market because the

50 has really crossed below the 150 it's

a confirmed downtrend then you could

have gotten out of the market you know

sell all your stock or keep your stock

and buy lots of put options to ensure

your stocks and then let the bear Market

play out so in this case you can see the

bear Market continued going down

right it went all the way down now where

would you have brought back you have

bought back when the 50 blue line

crosses back above the 150 and they both

start sloping upwards that confirms the

new bull market right so you can see

over here

uh was this a uptrend confirmation no

this was not because you can see the 50

moving average

the Blue Line crossing above the green

line let me zoom in right but the green

was still sloping down as long as one

moving average slopes down it is not a

reversal yet so that was not a uptrend

signal you would have

stayed out of the markets kept your boot

options and Let It Go lower now how

about here

let's look over here same thing you can

see the 50 Crossing above the 150 over

there uh but the the green is still

sloping down so that was again not in an

uptrend signal now here over here that's

an uptrend signal you have got a blue

line 50 Crossing above the 150 blue is

sloping up green is sloping up so again

once they both slope upwards

that is a bull market confirmation and

then you could have gotten

back into the market over here bought

back all your stock and then right that

blue Market all the way up so yeah you

can use that 50 150 signal as well okay

now of course you know there's no

technical method that is perfect every

technical method always has its pros and

cons so you have to understand that

whatever method you use you have to

understand its limitations let's look at

uh the next one over here okay so this

was the 0708 crash right let's see how

that one played out over there okay

so same thing we had an uninversion over

here

and then the bear Market started over

there all right but you can see the

trend was still up all right the 50 was

still above the 150 the moving averages

were still sloping up but over here you

can see

the 50 Crossing below the 150 right and

the blue is sloping down the green is

sloping down and that is a downtrend

signal so you could have sold everything

over there got on the market or again

buy lots of put options to Hitch your

long portfolio and then

uh that would have

been the bad Market going all the way

down and then over here we get that

again reversal signal right the Blue

Crossing above the green blue sloping up

green sloping up and that would have

triggered that new bull market signal so

you can use this to again uh read the

downtrends to the uptrends the uptrends

to the downtrends in other words don't

just look at the yield curve you know

confirm it with the trend of the market

and again you can use these moving

averages now again

it works very well now this method works

very well when the trends kind of like

are very smooth right from an uptrend to

a downtrend it's very smooth it works

very well now where it doesn't work well

is when the market plunges suddenly like

it goes down rapidly without going down

slowly that happens when there's like a

like a pandemic or you know something

unexpected happens so for example if you

take a look at

the most recent bear Market which we

went through a while ago uh give me a

second let me just reload this over here

let's go back to yeah this one this was

the covet crash if you guys recall right

okay

so in 2019 we had that yield curve

uninversion and then we had the uh bear

Market oh sorry the recession started

here bear Market started here and then

we had that boom plunge now when the

market goes down very rapidly then this

moving average moving averages become

quite useless because remember that

moving averages are lagging indicators

they take time to cross over right so

when the market goes down very fast by

the time that 50 crosses below the 150

giving you a downtrend signal it's too

late because if you wait for that signal

and you sell over there you're selling

at the bottom

all right and by the time that 50

crosses back above that 150 giving you

an uptrend signal you buy back there

guess what it's like you know you sell

at the bottom and you buy back at the

top and you miss out on all this upside

that's why if you recall back in 2020

when the market crashed like that I

didn't sell even though I got that 5150

signal because you must know when to use

a technical signal and when not to use a

technical signal so when the market goes

down 90 degrees we call it a we call

that a parabolic move then you ignore

the moving averages and you've got to

use other signals and if you guys recall

one of the signals I used was an

oversold signal that was actually

invented by Larry Williams credit to him

right and if you guys recall it is

called the SPX oversold signal

uh which is this uh signal I use on

weekly candles all right if you you guys

recall my Coke bottle

uh video where I did I said okay uh it's

like a coke bottle gonna explode right

and I and I bought right at the bottom

because I use this SPX weekly oversold

signal again credit to Larry Williams

that actually uh created the signal

right that when you see a Sharp 90

degree drop ignore the moving averages

but look at the Williams percentage r52

and 13 days right when you get both

oversold

and you get normalized ATR which is

above 80 and all these three align

that's the bottom we got in right there

to write that bull market up if you guys

recall my video at a time I talked about

all these things right so I said

investor and Trader you could be very

flexible there are many methods you can

use you can use moving averages you can

use oversold signals you have to know

when to use what yeah but at the end of

the day remember that if you don't use

any of these signals you just want to

hold on to great companies through the

ups and downs you will also do very very

well so there are many methods you can

use but the important thing is to not

you know blindly freak out or sell

because of something you read in the

media or rumors or predictions of people

right we make decisions based on facts

based on technical patterns and we

follow our investment and trading plan

and that's how we do very well in the

markets okay so for now

no need to panic the u-curve is inverted

terribly but it's not yet uninverted

when it uninverts I'll create another

video and we'll talk about it and we

look at a trend is the trend still up or

is the trend reverse down and what could

we do about it could we you know get out

of the markets and get back in later on

do we buy put options

follow me on my channel and we shall

right through these waves together yeah

so in the meantime have fun May the

markets be with you and I'll see you

guys in the next video remember to

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markets be with you