RE:RE:Worrisome sign? or Not?Jay....thanks for your thoughts
All through my investment career and after I retired many years ago, people have talked about averages and what happened in the past. I'm not in the camp of people necessarily that say "This time is different". BUT, what I do and in a sense tried to give a flavour of is in my post is that pragmatic investors look at the current conditions because each time a similar happens, not every single factor is exacty the same as it was for the average or the time before.
So what I do when things come up to make a major decision or establish a base case to drive my investment decisions, I create a checklist of important economic and business factors and see which ones are basically the same as happened in the past and look at the ones which are different. I then key in on the ones that are different and try to determine if they are important to my decision and if so what is the likely impact on my decision or base case.
Sometimes these differences can cancel each other out and at other times they create an even bigger effect.
I admit that this process is part analytical and part alchemy. There is no simple way around it.
But with the utmost of respect to you, I think simply relying on an average of what happened the time before and not in a sense digging deeper and taking off the first layer of the onion will often lead to the wrong course of action at least WRT timing. As a case in point I recall after 9/11 and the market was closed for a few days that there was one report after another predicting certain things would happen when the market re-opened based on average of similar things that happened in the past. As I recall, every single one of them proved to be wrong.
The other benefit of the approach I use is that, out of the myriad possible indicators available, you can narrow it down to a couple or few key ones that are readily available. In this way it keeps things pretty simple and fits on the back of my envelope.
Curiously, none of this says that your prediction is wrong and in fact, in an earlier post (can't recall the timing and would have to search and look it up as to when I posted), I suggested that I had revised my outlook for a recession and suggested 1Q or early 2Q of next year which roughly corresponds to your 22 month average.