Sunday, February 4, 2024

M2 Crisis?

2/4/24 Motley Fool warns of imminent likely short but severe recession based on sharp decline in M2.  When I went to find the definition of M2, I found the St. Louis Federal Reserve Bank definition:
"Before May 2020, M2 consists of M1 plus (1) savings deposits (including money market deposit accounts); (2) small-denomination time deposits (time deposits in amounts of less than $100,000) less individual retirement account (IRA) and Keogh balances at depository institutions; and (3) balances in retail money market funds (MMFs) less IRA and Keogh balances at MMFs.

"Beginning May 2020, M2 consists of M1 plus (1) small-denomination time deposits (time deposits in amounts of less than $100,000) less IRA and Keogh balances at depository institutions; and (2) balances in retail MMFs less IRA and Keogh balances at MMFs. Seasonally adjusted M2 is constructed by summing savings deposits (before May 2020), small-denomination time deposits, and retail MMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1."

M2 is not defined the same as in previous oops moments.  I am not going to sell off low performance mutual funds and buy that Corvette, at least not based on short-term equities risk.  Motley Fool does believe long-term investors should stay in the market.

4 comments:

  1. Buy the 'vette! What's appreciation on a typical Corvette? Doubt you'd lose money. Besides, it's fun.

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    Replies
    1. They do not appreciate. Year old Corvettes with a couple thousand miles often sell for a few thousand less than they were new.

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  2. So buy one that's older, let someone else eat the 1st year depreciation.
    :-)

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    Replies
    1. That is what I did on my 2000. Sticker was $48,000. I bought it with 30,000 miles for $32,000.

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