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August 2019 Update - The Recession Question and Conventional Wisdom

September 9, 2019

 

A man walks into a doctor with lettuce sticking out of his ear.

 

The doctor says, “I am afraid that is just the tip of the iceberg.”

 

The S&P 500 declined 1.6% in August a few points off its all-time high, but those numbers are “just the tip of the iceberg.” Escalating US-China trade tensions caused the S&P 500 to decline by 2.5% or more three times in the month and the yield curve inverted leading many to ask, “Are we entering a recession?"

 

I think a better question is, “Does it even matter if we enter a recession, if the conventional wisdom is that we are entering a recession?”

 

Before the market declines of 2000 and 2008 the conventional wisdom was the economy was doing great. What hurt investors was owning stocks as the conventional wisdom shifted from positive to negative.

 

I am not sure why the yield curve is inverting. Maybe it has something to do with the trillions of dollars of negative yielding bonds around the world and speculation that United States will also end up with negative yields in a few years.

 

If so, that’s a reason to buy shares of growing companies, not to avoid them.

  

 

About the Author

 

Manny Weintraub, CFA, is the President of Integre Asset Management, a New York-based registered investment adviser, that combines investments in industries benefiting from long-term trends with the use of active management to reduce risk. A former Managing Director of Neuberger Berman, where he co-managed more than $1.5 billion in U.S. equity assets, Manny is an experienced portfolio manager and contrarian investor. A graduate of the University of Pennsylvania, he serves on the boards of The Atlantic Theater, and North Country School – Camp Treetops. To learn more about Integre, please visit www.integream.com.​

 

Integre Asset Management Disclaimer – 8/1/2019 Past performance may not be indicative of future results and every investment program has the potential for loss as well as profits. This material is presented solely for informational purposes and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security or fund interest or any financial instrument. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All material has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy of, nor liability for, decisions based on such information. All information is current as of the date of this material and is subject to change without notice. The views expressed in this presentation are subject to change based on market and other conditions. Any views or opinions expressed may not reflect those of the firm as a whole. Additional information can be provided upon request.

 

© 2019 Integre Asset Management, LLC. All Rights Reserved. No part of this document may be reproduced, stored, or transmitted by any means without the express written consent of Integre Asset Management. For further information please see www.integreAM.com or contact the firm by electronic mail at info@integreAM.com.

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