Recession on the horizon!

There has been a lot of talk about the next "crash" on BP. I believe what most people mean when they say crash is recession. There are plenty of thoughts about what the next recession will look like for different asset classes but I think we need to review the data before we get too carried away.

(Photo Credit: Keeping Current Matters)

I'm a big fan of history. In fact in college I took 3 history classes when I only needed one. It's important to pay attention to history in this case. We seem to have a short memory, or are just good at remembering painful experiences. 2008 was incredibly painful for a lot of people. There are also quite a few who did very well in the aftermath. The likelihood of something exactly like that happening again is very low. As you can see by the graph median home prices are not severely affected every time there is a recession. In some cases they even rise. Depending on what causes the recession people may even flock to housing because of it's historical stability.

I'm no wizard but I'm not preparing for the next "crash". Because I know that I'm not that smart and do have a crystal ball I'm listening to smart people like economists and professionals who've been in the industry for decades that say that a shift or recession is coming in the next 18 months or so. The housing market may be affected, chances are it won't be in the same was as 2008. The old saying "even a broken clock is right twice a day" applies to making predictions about markets. If you say it's going to correct, at some point you are going to be right. Nothing stays the same forever but don't expect history to repeat itself so soon.