Whenever we post an article that has arguments suggesting a negative outlook based on recent trends and indicators, we receive criticism from readers who are very bullish on stocks and claim anything negative is doom and gloom. Coincidentally, content containing negative developments receives the most attention which is ironic, as if people actually want bad circumstances to come to fruition. Our goal is neither to create clickbait content nor to have bias. All we want to know is what is really happening, and examine probabilities with which future events will occur.

Whenever we have positive or negative arguments dominating the story, we always try to examine both sides of the argument. The world is never one-sided black or white, and the truth generally happens to be in the middle with shades of gray. If you have a positive or negative outlook on something, you should welcome any disagreement because you can learn about a new risk you weren’t familiar with. It’s meaningless that stocks are in a record-long bull market. They actually fell 19.39% in 2011, proving that volatility isn’t gone even without a recession or technical bear market. To be clear, the calls for a recession every year get old, which is why we don’t do that. We stick to the facts and only make conclusions objectively.

Housing Burst Won’t Occur Again

As we have mentioned in other articles, the housing market has turned around in that it has become a buyers’ market because prices and interest rates have gotten out of hand. In a normal market there is price discovery and sometimes price growth falls. There’s nothing odd about that. The 2008 crisis was unusual because of the extreme speculation in housing and the lack of vetting by lenders.

As you can see from the chart below, over 20% of the mortgage originations during the bubble era were given to borrowers with between a 660 and 719 credit score. 

Source: the chart below