Recession Indicators

Hello you wonderful and amazing people. Happy New Year to you all, i sincerely hope you have a fantastic year and are doing well.

I was kindly wondering please do any of you use any indicators that could help you gauge if a recession could be coming, when investing in value stocks please? I know there is lots of previous charts you can review of when previous recessions hit and i please wondered what the best data to look at is, to predict if a recession could be coming please, such as employment data, inverted yield curve? If anyone kindly had any thoughts on this i would be forever grateful and thankful it would mean the world to me.

Sending you lots of good wishes and i truly hope you achieve massive success in the stock market. Very best wishes to you all.

Economic theory suggest destocking by companies - this would manifest in the accounts as a reduction in working capital.

However, a lot of this occurred during the pandemic and companies have been rebuilding stocks - hence cashflow statements show increases in working capital.

Iโ€™d suggest looking at Purchasing Manager Indices - these are good leading indicators.

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Thank you very much for your comments heathrow that is very kind of you. I am very grateful for your response it really means alot.

I appreciate you guiding me to look at Purchasing Manager Indices that is very kind of you, i am forever grateful.

I wanted to kindly please ask lastly i know some people mention that the S&P 500 Index is overvalued at the moment, due to the surge in stocks after the pandemic in 2020. I kindly wondered please does this naturally mean a correction could happen or could the S&P 500 continue to trade at overvaluation levels please for many years? Lastly is there anyway to calculate if the S&P 500 is overvalued or any charts for this please? If you could kindly help with this i would be forever grateful and thankful it would mean the world to me.

Sending you lots of good wishes heathrow and i truly hope you continue to have another fantastic year. Very best wishes and take care.

Iโ€™m not sure there are any reliable recession indicators and experts canโ€™t agree about the chances of a recession. If there were any good indicators you would see them being regularly referenced.

Futures do give some indication and show what the sentiment is in terms of confidence about future prices. Also the VIX is a forward looking indicator. Those both of these will give an impression about the overall view of recession.

I would listen to commentary (that you respect) and see what they are saying and then consider whether or not that fits with my own view. Thus you can find some โ€œexpertโ€ saying there will definitely be a recession by โ€ฆ and another expert that says weโ€™ve passed the risk of recession and there will definitely not be a recession. I wouldnโ€™t listen to either โ€œexpertโ€ but would listen to what they are relying on and quoting to support their view and then consider those things