Sure, our Recession Risk indicator (RR) has been slowly rising since 2011, but the keyword there is slowly.
Ever since June of 2018, it’s taken off like a rocket. And even if 12-13% still isn’t a high risk of recession, we can tell that if things keep moving the way they are, we’ll be at around 25% chance of recession by the beginning of 2019!
All of our Risk Profile portfolios take Recession Risk as a large input for Your Allocation. Right now, it’s only a small factor in the size of the optimal S&P 500 allocation, but it’s getting bigger every day.
The business cycle is still a very real thing — much as some people would like to pretend it isn’t.
Historically, Recession Risk fluctuates from 0% to 40%. Learn more about how we deal with the risk of recession.