Recession and the stock market

[utrecht]

OK, so lets assume that we are in or will very shortly will be in a recession.

How has the stock market perforemd in previous recessions?

 

[audreyh1]

If we were already in a recession, the stock market would have sold off 6 months ago - say 20%. It did sell off 10% over the summer, but since recovered to new highs and has pulled back a little.

You really can't know/predict this stuff!

Usually, the market sells off pretty hard 6 months ahead of a recession. But there are lots of other reasons why the market might sell off.

Audrey

 

[wcv56]

(ETF) SH might be a good bet if you think your timing and knowledge are correct.

 

[utrecht]

I have no idea if we are in a recession or heading for one. Im just asking how the market has reacted in previous recessions.

Wasnt there a recesison in '90-'91? The market did pretty good during that timeframe.

 

[twaddle]

Recessions mean that earnings drop. The stock market does not like recessions. The last one was in 2001, and you remember how that went.

Here's 1990:

 

[utrecht]

The conditions today are even remotely close to 2001. I would bet they are closer to 1990 than 2001.

The chart shows the DJIA market flat and the Nas up during that recession. Besides, thats only 7 months. That doesnt mean much of anything.

Is there any multi - recession data?

 

[twaddle]

The conditions today are even remotely close to 2001.

You're right. We're having a *much* bigger housing bust this time. Probably Japan-1990 is a better analogy.

 

[Spanky]

You're right. We're having a *much* bigger housing bust this time. Probably Japan-1990 is a better analogy.

Are you pretty much in cash already?

 

[twaddle]

Are you pretty much in cash already?

No, I'm going down with the rest of you.

There's no way to predict the duration or magnitude of a recession. I think we'll probably have one, and I may do some "tactical allocation" if the indicators become more bearish.

In the meantime, I get my thrills with an occasional options-based bet.

 

[audreyh1]

I have no idea if we are in a recession or heading for one. Im just asking how the market has reacted in previous recessions.

Wasnt there a recesison in '90-'91? The market did pretty good during that timeframe.

No, the market did poorly going into it.

Remember, the market sells off before the recession, during the recession - at least towards the end of it, the market recovers.

Audrey

 

[utrecht]

Well, if earnings are bad during a recession and the market sells off before a recession, then we arent in one.

Earnings have been mostly good and the market is definatley not selling off.

I think this is all just mumbo jumbo. Its like chart reading. You can make it say whatever you want it to say.