Selling Everything (How To Invest In A Recession)

The 2022 recession and what you need to know
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IS THERE GOING TO BE A RECESSION IN 2022?
Every time we had a spike in inflation above 5% - it was followed by a recession other than 1 time in the last 70 years.

WHAT IS A RECESSION?
A recession is technically defined as 6 months - or two back to back quarters of negative growth.

HOW DO WE MEASURE GROWTH?
Growth is measured by the GDP - the gross domestic product which you can also find here: https://fred.stlouisfed.org/series/GDP, you can see the most recent recession - started in Q1 of 2020, there was a dip in growth, and then a huge dip in GDP in Q2 of 2020 which officially made it a recession.

WILL THERE BE AN ACTUAL RECESSION?
Check this out: https://fred.stlouisfed.org/series/CPIAUCSL going back as far as the 1950s, anytime we've had an inflation reading above 5%, we got a recession which are those grey columns in chart above.

WHAT IS INFLATION NOW?
Inflation is nearing 7% right now which means based on historical evidence, there's a good chance we'll get two consecutive quarters of negative GDP growth.

HOW DOES THE STOCK MARKET DO IN A RECESSION?
That's the real question! We’ve had 30 recessions between 1869 and 2018. Now of those 30, 16 recessions have had a positive stock market return from when they started - to when they finished.

The positive stock market recessions lasted on average - 16 months and stocks ranged a return between 0.7% to 38.1% with an average return of 9.8% despite the fact that the GDP declined on average 3%.

HOW IS THAT POSSIBLE?
They found the correlation between recessions as measured by the GDP growth and the stock-market at nearly -0.05. So it’s almost 0 correlation between a recession and the stock market. The 14 recessions when the stock market went down, lasted 18 months on average, with an average return of -14.2%.

SHOULD I SELL ALL MY STOCKS?
In order to beat a buy-and-hold return of 9.0% over the last 150 years, an investor would have to successfully predict 77% of the market turns —and move in and out of stocks/cash as appropriate (Russell Investments: https://russellinvestments.com/us/blog/us-stock-market-recession-history).

Even if you knew for sure when a recession was coming, the odds of losing or making money is about 50/50. History says it's nearly impossible to time the market.

MY INVESTING STRATEGY
Watch the video to find out!

Source: https://russellinvestments.com/us/blog/us-stock-market-recession-history

*None of this is meant to be construed as investment advice, it's for entertainment purposes only. Links above include affiliate commission or referrals. I'm part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.