Investors should not be missing the forest for the trees. Words of recession have the tendency to induce fear of tougher times ahead and can spook investors into selling ahead of one. But looking at the table, history has proven (time and again) that stock markets deliver positive returns after a recession. The table on the left shows the S&P 500 performance post-recession. On average, the market has returned 15 percent in the year (Plus 1) following a recession and over 100 percent after 5 years (Plus 5).
The Bottom Line
Recessions are part of an economic cycle – they are inevitable. Rather than fearing a recession, investors should heed history as a guide and take comfort in knowing that positive returns await those with a long-term perspective. The further out the better.
A Recession? Fret Not
What this Chart Shows
Investors should not be missing the forest for the trees. Words of recession have the tendency to induce fear of tougher times ahead and can spook investors into selling ahead of one. But looking at the table, history has proven (time and again) that stock markets deliver positive returns after a recession. The table on the left shows the S&P 500 performance post-recession. On average, the market has returned 15 percent in the year (Plus 1) following a recession and over 100 percent after 5 years (Plus 5).
The Bottom Line
Recessions are part of an economic cycle – they are inevitable. Rather than fearing a recession, investors should heed history as a guide and take comfort in knowing that positive returns await those with a long-term perspective. The further out the better.
So, sit tight and stop worrying.
Source: Ben Carlson, A Wealth of Common Sense