Summary
Phil Anderson argues that the yield curve re-inverting back to positive territory — not the initial inversion — is the historically reliable recession signal, and that the current un-inversion (after the 2022 inversion) confirms the second half of the real estate cycle is likely approaching its peak. The email also provides portfolio updates including stop adjustments, new watchlist additions, and a performance snapshot of the real-world 18.6 Strategic Investment Portfolio benchmarked against the MSCI World Index.
Key Claims
- The yield curve typically returns to positive territory before a recession arrives, not after — the un-inversion is the real warning signal — confidence: high
- The 2022 yield curve inversion did not signal an imminent recession because the real estate cycle placed the downturn still several years away — confidence: high
- As of mid-2025, the yield curve is moving back into positive territory after being inverted since 2022, which Anderson interprets as a cycle-topping signal consistent with prior cycles — confidence: high
- Most economists will misread the un-inversion as the recession alarm being turned off, when historically it is the opposite — confidence: high
- The Fed’s mandate focuses on lagging indicators (inflation and employment), causing it to be slow to adjust policy, which is why the curve steepens again before recession hits — confidence: medium
- Copper tends to see a massive price run in the latter stages of the real estate cycle; a breakout above $5/lb to new record highs is described as “imminent” — confidence: medium
- An inverted yield curve is not correlated to the severity of the subsequent downturn (referenced from The Secret Life of Real Estate and Banking, p. 370) — confidence: high
- The 18.6 Strategic Investment Portfolio strategy consists almost entirely of waiting for Mex Pete breakout setups combined with disciplined stop-loss execution — confidence: high
- The 2022 Roadmap indicated a down year; the fund stayed mostly in cash that year — confidence: high
Mex Pete References
- The 18.6 Strategic Investment Portfolio buys “Mex Pete breakouts” almost exclusively — described as the core strategy of the real-world fund
- OLLI (Ollie’s Bargain Outlet Holdings) and SLV (iShares Silver Trust) both moved above their breakout levels but were “too extended” for new entry — implied Mex Pete setups being monitored
- CPER (United States Copper Index Fund) is being watched for a major breakout; breakout level set at 5/lb)
- WBC (Westpac Banking Corporation) added to Australian watchlist; watching for a move over $35
Stock Picks / Signals
| Ticker | Exchange | Action | Detail |
|---|---|---|---|
| RRC | US | Stop adjusted | Stop moved to $36.00 even |
| OLLI | US | Watchlist | Broke out above entry level but too extended; watching for pullback of a few days |
| SLV | US | Watchlist | Broke out above entry level but too extended; watching for pullback of a few days |
| CPER | US | Watchlist | Breakout level adjusted to 5/lb |
| WBC | ASX | Watchlist added | Watching for move over $35 to initiate position |
Predictions / Forecasts
- Yield curve completing its return to positive territory into 2025–2026 signals the end of the second-half upswing in the real estate cycle is nearing — timeframe referenced as “into 2026”
- Copper breakout above $5/lb to new record highs described as “imminent” as of July 2025
- Large US bank stocks moving to new highs is expected at this point in the cycle; WBC anticipated to follow
Notable Quotes
“Just as the yield curve moves back into positive territory, most economists will think the recession alarm bell is being turned off. But it’s actually quite the opposite, and the timing could be impeccable once again given our place in the real estate cycle.”
“For long term steady profits without having to watch the markets on a daily basis, this is the best system I have ever found, provided you do just two things: wait for the set up, and then set an effective stop loss and exercise it if it is triggered.”