DDIntel - Recessions in the Metaverse, and Tips for Day Trading Babies

Recessions, recessions, recessions. Even after a green day in the markets on Monday due to better than expected results from JP Morgan, recessions are on everyone’s mind. Last week marked the 7th consecutive week of losses for major indices, the worst losing streak since the Dot Com Bust.

With major assets from bitcoin to SPY in or a near a bear market or worse, the question for economists and investors: Is a recession on the horizon? Are we already in one? While Q1 US GDP numbers were negative, most are not predicting a negative Q2 print.

Nevertheless, the odds of a recession in the next 12 to 24 months are certainly elevated, not least due to the war in Ukraine, a lockdown in China, supply pressures worldwide, and continued global inflation.

In this week’s DDIntel, we take a look at recessions and beyond, how to factor in inflation into your investment decisions, NFTs for dummies, the Metaverse and more. But first, we start with some tips for day trading babies, since some of you will inevitably gamble on the stock market during this volatile time.

What is a day trading baby, you ask? Anyone new to day trading. Even if you’ve tried day trading for a year or two, you are probably still a day trading baby. In fact, our first tip is don’t day trade. Why? Because only 5–10% of day traders are consistently profitable over a given year. But if you insist, here are 4 more tips:

It almost seems like you need to understand everything before day trading because to be profitable and beat the market, if it is even possible, requires understanding the big and small picture, the technical and fundamental, growth and value, macro and micro, and so on.

Much could be written about each of these points, but we will be brief here. You don’t have to be the next Keynes, but you should have a basic understanding of how macroeconomics works. A good starting point is Investing.com’s economic calendar and Fed Rate Monitor tool.

Watch how the market reacts to changing data to get a feel for how the macro affects aggregate stock prices. To be great stock picker, however, you also need a good understanding of microeconomics to see which companies have a competitive edge. Learn the fundamentals of trading, while learning fundamental investing principles.

Finally, of course any day trader must familiarize themselves with technical indicators. Many dispute the efficacy of technical trading, since according to the efficient market hypothesis it is impossible to predict future stock prices on the basis of past prices. Nevertheless, there is some theoretical support for technical trading, such as George Soros’ theory of reflexivity.

Don’t worry if you are feeling a bit lost at this point. That is why we at DataDrivenInvestor launched DDIChat, a marketplace for expertise where you can connect with experts on topics ranging from economics, finance, and investing, to machine learning, entrepreneurship, and blockchain development.

So buckle up, grab a cup of coffee, and check out what the DDI community has generated in the past week. Be sure to subscribe, forward this to others who might like it, and check out our previous issues. You may also want to learn about how to work with us here.

NFTs are the hottest crypto topic, at least until the bubble inevitably bursts. If you are new to crypto or NFTs, check out NFTs for Dummies by Soha Sherwani. Hopefully NFTs don’t follow the path of Luna. In the short term, a correction is possible. But long term, NFTs offer immense potential to support artists while providing an alternative asset return.

If you are new to finance and coding, this is an excellent starting point for you. In this article, not only will you learn about risk and an optimized dividend portfolio, but you get to see first hand how coding in Python has practical and real world applications.

According to Bank of America, there is a one-in-three possibility of a US recession occurring sometime next year, although it will be moderate by historical standards. Read more to find out why BoA thinks there could be a “bumpy landing” ahead.

On that note, Elon Musk, when he’s not in contention for world’s most controversial man, is claiming we are already in a recession. When Musk speaks, markets listen. So, is the world’s richest man right that we are already in a recession? What should you do to weather the storm?

If you’re looking for something comprehensive, look no further. And don’t worry, crypto is not on the list! Ranging from real estate and low volatility ETFs to cash and emerging markets, Sriram Balasubramanian offers the top 10 assets to hedge against inflation.

This asset correlation model predicted a bear market 6 months in advance. Efficient diversification is key to managing risk, as is identifying systemic events. In addition, this article covers how to read correlation trend plots and patterns to watch out for, such as trend spikes, correlation uptrends, divergence and more.

Believe it or not, but algorithmic trading has been around for around half a century, after the NYSE launched automated tools in the 1970s. Some debate whether algorithms add liquidity to markets or merely add to volatility. Check out this article for an in depth overview for the history of algorithmic trading.

Finally, now that Meta stock is down over 30% in the past year, it is fair to ask is there a recession in the metaverse? Moreover, author Kean argues that blockchain is fundamental to the future metaverse. Without it, it’s nothing like the real thing.