An Urgent Warning For Investors | The Coming Recession

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THE COMING RECESSION:
THANKS TO https://marketsentiment.substack.com/ FOR HELPING!
From 1869 to 2018, there have been a total of 16 recessions which had POSITIVE stock market returns….in fact, of those positive recessions…the market went UP an average of 9.8%, during a time the GDP declined by 3%…. or, in other words…out of 30 recessions…HALF had no correlation whatsoever with lower stock values.
https://russellinvestments.com/us/blog/us-stock-market-recession-history

To take that a step further, since 1869…one study found that the correlation between GDP growth and stock market returns was nearly ZERO…at 0.05%….and, on average, the US stock market peaks SIX MONTHS before the start of a recession…and, that’s where we get into some of the bad news.

According to AWealthOfCommonSense Blog, who I’ll link to down below in the description…throughout EVERY SINGLE RECESSION SINCE 1945…the stock market has – at SOME POINT – seen a sell off…with the average drawdown coming in at a whopping 29.2%…
https://marketsentiment.substack.com/p/recession-primer?s=r

HOWEVER…the GOOD NEWS is that, even though there CAN be a rather abrupt sell off…by the time the recession is OVER, the market actually RECOVERS, and has posted an average PROFIT of 1.7%…with, an average gain of 15.3% the following 1 year….meaning, INVESTING DURING A RECESSION is one of the most profitable times to invest. Not to mention, in the 3 years following every single recession we have ever had…the market was 100% in the green.
https://awealthofcommonsense.com/wp-content/uploads/2015/03/recession-perf.png

HOWEVER…as Ben Carlson pointed out…it’s not as easy as thinking: “OH PERFECT…I’ll just invest during a recession when the market drops…SIMPLE!” – because, as he points out: You don’t know you’re IN a recession…until it’s too late. Since, technically, a recession is 2 periods of Negative growth…we could be in the start of a recession RIGHT NOW…but, not “officially know it” until much, much later.

In this case, SeeItMarket found that – MOST OF THE TIME…the market saw PEAK PAIN 6 MONTHS PRIOR TO A RECESSION….because, for the most part – the stock market tends to be FORWARD THINKING.

What History Says About Recessions and Market Returns

If anything, Bloomberg notes that a bear market tends to be a better predictor of a recession…rather, than a recession being a predictor of a bear market…
https://assets.bwbx.io/images/users/iqjWHBFdfxIU/i1t1EHT3ZHHQ/v2/pidjEfPlU1QWZop3vfGKsrX.ke8XuWirGYh1PKgEw44kE/1240x-1.png

That’s why, based on EVERY other recession in the past…the best course of action is to simply stay invested…and, if we ARE IN a recession…it’s best to KEEP INVESTING when times are bad. Just expect that stock market volatility will become a LOT more common, it’s always a good idea to focus on STAYING EMPLOYED….and understand that NO RECESSION has EVER lasted more than 18 months…meaning, there will always be a light at the end of the tunnel….if you subscribe.

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