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They're not making a prediction. "We don’t make any actual predictions about where things are going next month or, in the markets, next year. The stock market
by panarky 8y ago
They're not making a prediction.
"We don’t make any actual predictions about where things are going next month or, in the markets, next year. The stock market could rise a lot, short-term. We don’t know."
Vanguard's model says the probability of a recession by late 2020 is between 30% and 40%, which is higher than normal.
That also means that the probability of no recession by late 2020 is between 60% and 70%, which is lower than normal.
- h4b4n3r0 8y agoI don’t know how to say this any more plainly: anyone who predicts such things is 100% full of shit. It’s a random process. Anyone able to predict this with a significant degree of certainty would quickly become a multi-trillionaire. Insanely huge financial institutions employing thousands of PhDs were not able to predict the last big one and many of them would have collapsed without government’s help. What makes you think anyone has the foggiest clue as to the timing and severity of the next black swan event?
- katzgrau 8y agoAgreed. There are an unlimited number of variables that cannot all be accounted for, and even the most insignificant of them have the ability impact the future in dramatic ways. There is absolutely no saying what the likelihood of a recession is.
- lucisferre 8y agoBoth of you seem to be confusing estimating the likelihood of a random event with predicting the event’a occurrence. These are not remotely the same.
- h4b4n3r0 8y agoNo, it’s the downvoters who are confused. :-)
- st26 8y agoThere is absolutely no saying what the likelihood of a recession is. Agreed, unlike every other random event that exists in the universe, recessions are the one thing whose likelyhood cannot possibly be expressed.
- chrisco255 8y agoProblem here is it's not a repeatable experiment. The sample size is 1 world economy.
- lucisferre 8y agoThis is a fair comment and I'm not sure why you were downvoted. However it is not a single random event either. A continuous random process with memory would probably be the most appropriate model, and this would be what Vanguard and others use to make estimations of likelihood.
- panarky 8y agoAny student of Taleb should know that "black swan" events are rare, unexpected, extreme outliers. Economic recessions are none of these. They are common, expected, and well within the experience of most adults. Booms and busts have been recurring semi-regularly since the beginning of market economies. While it would be foolish to predict with any great certainty the date or duration of the next downturn, we can say with high confidence that a downturn will occur. It doesn't seem unreasonable to observe that recessions are more likely when the yield curve is flat and valuations are historically high than when the yield curve is steep and valuations are more moderate.