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Over the last 40 years, the U.S. has had recessions in the years:
1973 - 1975
1981 - 1982
1990 - 1991
2001 - 2002
2007 - 2009
It also happens that the stock market declined substantially during most of these periods - except that the 1990 - 1991 decline was less marked than the others.
So, given this high correlation between recessions and stock market declines, would you hold onto your investments during recessionary periods like these? Would you trade any stocks or would you stay out of the stock market altogether?
Would you invest/trade in stocks during an economic recession? Would you hold onto your investments during recessionary periods like these?
Would you trade any stocks or would you stay out of the stock market altogether?
Buy it from them when the others are scared.
Sell it back to them when they're confident.
Over the last 40 years, the U.S. has had recessions in the years:
1973 - 1975
1981 - 1982
1990 - 1991
2001 - 2002
2007 - 2009
It also happens that the stock market declined substantially during most of these periods - except that the 1990 - 1991 decline was less marked than the others.
So, given this high correlation between recessions and stock market declines, would you hold onto your investments during recessionary periods like these? Would you trade any stocks or would you stay out of the stock market altogether?
Sure, I would.. if I knew exactly when the future recessions will begin and end!
Sure, I would.. if I knew exactly when the future recessions will begin and end!
Well, you cannot know exactly when. But future recessions are certain to happen.
And the next one could likely happen sometime in the next few years given the historical record.
I realize that a lot of people cringe at the mention of "recession" since we went through a rather painful one and are still recovering from it. However, as investors I think it's important to keep in the back of our minds bear markets that lie ahead over the long term.
Last edited by BigCityDreamer; 07-26-2013 at 02:43 PM..
And in the years following...
1975 - Dow +38%
1982 - Dow +20%
1991 - Dow +20%
2003 - Dow +25%
2009 - Dow +19%
If you wait to see the robin, spring will be over.
you're cherry picking your data. The 2001 recession ended in Nov 2001, and the Dow declined 18% in the 12 months that followed. Using 2003 instead of 2002 to try to make a point is misleading
While buying during a recession is USUALLY a good idea, stocks don't always bottom during a recession as I just showed.
I don't like to look at it as buying during a recession, more like buying when the stocks I want are on sale. The cause of low pricing, be it a recession, a war scare, or some other general market nonsense matters nothing to me. If the stocks on my watch list are cheap, I'm a buyer. My dabbling in speculative stocks may stop, but buying and/or adding to my long term postions when they're selling for .40 cents on the dollar is a cornerstone of my investing philosophy. And Celcius is absolutley correct about waiting to see the robin - you pay a very high price in the stock market for a cheery concensus.
Well, you cannot know exactly when. But future recessions are certain to happen.
And the next one could likely happen sometime in the next few years given the historical record.
I realize that a lot of people cringe at the mention of "recession" since we went through a rather painful one and are still recovering from it. However, as investors I think it's important to keep in the back of our minds bear markets that lie ahead over the long term.
If I knew when recessions will occur in the future, I'd certainly only buy during them..
But nobody knows where the market will go in the short and medium term.. so just buy an index fund and harvest the positive long-term average returns of 5 - 15% a year.
My point was actually to just ignore macroeconomics entirely.
I could've made that clearer, to be fair. Base your investment decisions on what the investment is actually worth, recession or not.
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