I wrote last summer that the Dow would not rise much above 17,300 and then eventually drop from that level into a recession. We see markets dropping now, but are they dropping into a recession or a resetion?

What is a resetion? That is when the markets “reset”. Stock values have been high so at some point they need to come back to reality. Many companies have been overvalued. Now is the time to reset stock values.

The difference between a recession and a resetion is that a recession hits the whole economy and a resetion hits certain markets and business values.

In a recession and a resetion, many companies are challenged to survive and some end up fading away. Ultra-low interest rates have kept inefficient companies alive which have kept down wages and productivity. The survivors come out stronger.Productivity rises after.

We will see at least a resetion of the stock markets. But will we see a recession in the whole economy? Well, there is a need for a resetion of the whole economy too. Rent prices are pressuring the budgets of many people.Inefficient companies need to be weeded out. Asset prices beyond stocks need to reset too. So a resetion (resetting) of the whole economy could result in some healthy changes.