Vanguard Warns of Worsening Odds for the Economy and Markets

Re:Vanguard Warns of Worsening Odds for the Economy and Markets by panarky on Monday August 13, 2018 @10:44PM (#17755231)

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.

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Re:Vanguard Warns of Worsening Odds for the Economy and Markets by h4b4n3r0 on Monday August 13, 2018 @11:19PM (#17755363)

I 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?

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Re:Vanguard Warns of Worsening Odds for the Economy and Markets by panarky on Tuesday August 14, 2018 @01:07AM (#17755702)

Any 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.

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Re:Vanguard Warns of Worsening Odds for the Economy and Markets by katzgrau on Monday August 13, 2018 @11:42PM (#17755449)

Agreed. 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.

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Re:Vanguard Warns of Worsening Odds for the Economy and Markets by st26 on Tuesday August 14, 2018 @12:06AM (#17755520)

There 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.

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Re:Vanguard Warns of Worsening Odds for the Economy and Markets by chrisco255 on Tuesday August 14, 2018 @01:44AM (#17755830)

Problem here is it's not a repeatable experiment. The sample size is 1 world economy.

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Re:Vanguard Warns of Worsening Odds for the Economy and Markets by lucisferre on Tuesday August 14, 2018 @09:57PM (#17763274)

This 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.

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Re:Vanguard Warns of Worsening Odds for the Economy and Markets by lucisferre on Monday August 13, 2018 @11:50PM (#17755472)

Both 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.

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Re:Vanguard Warns of Worsening Odds for the Economy and Markets by h4b4n3r0 on Monday August 13, 2018 @11:55PM (#17755486)

No, it’s the downvoters who are confused. :-)

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