Is There a Lot of Hype About the Upcoming Recession?
Investment Principles for Troubling Times
If there's one thing that has significantly improved my investing over the past few years, it's the practice of writing down my investment principles. These principles, which I consider unalterable and repetitive from cycle to cycle, are incredibly basic, yet they provide me with the ability to think in a much more objective and disciplined manner.
This practice has led me to engage in thorough reflection for a sufficiently long period before making any investment decisions. This ensures that I truly understand whether the action I am considering is the right one to take.
Ray Dalio exemplified this approach and documented it in his book "Principles," which is an invaluable resource that I highly recommend everyone read. It offers profound insights that are applicable not just to investing, but to life in general.
Why am I emphasizing this? For a simple reason: in recent days and weeks, I have been receiving numerous messages and reading a plethora of articles predicting a major recession. This is quite normal because, if we scrutinize the valuation of technology companies, we might be witnessing a scenario very similar to the one in 2000
Additionally, if we compare the weight of the largest companies in the indices to the total value of the indices, we are also approaching very precarious levels. The concentration risk is becoming increasingly apparent and worrisome.
Today, I want to share with you a comprehensive analysis of the current state of the market. This detailed overview will provide you with all the necessary information to prepare for what could be one of the most significant recessions in history.
I don't intend to be a pessimist, but I must remind you that at Asymmetric Finance, we sold our index holdings at the end of 2021, only to repurchase them a year later at a 20% discount. Additionally, anyone with a basic understanding of the history of major world powers knows that before the end of a world order, there are typically 3-4 major depressions. We've seen this pattern in 2000, 2008, and 2020.