Chart of the Day: Stock Stats During Recessions

click to enlarge

Someone sent me this chart, which I thought was fairly interesting. It shows the stock performance during recessions dating all the way back to 1926.

The most interesting stat is the one that shows how much the market bounces from its low to the end of the recession. That means, that on average, the stock market bounces +25% before the recession is even over.

The hard part, of course, is figuring out both when that low in the market is, as well as how long the recession will last.

I think the declines over the last year have discounted a ton of economic weakness already. Moreover, the historic amount of stimulus that has been thrown at the markets and the economy will, in my opinion, achieve their desired effect.

I just think that most people are not willing to give these programs the appropriate amount of time to kick in and work. Heck, I like instant gratification as much as the next guy, but these programs always work with a lag time, not immediately. For this reason, I think that 2009 will be a much different year in the stock market than 2008.

Comments

[Lincolnpark:]

It's not clear from this article whether the author thinks 2009 will be better or worse than 2008.

2008 Dec 03 07:50 AM

[bobbobwhite:]

Due to his "declines over the past year have discounted a ton of economic weakness" and other like opinions, he thinks 2009 will be a better year for stocks than 2008.

I, however, do not think it will be much better, if any. The bottom of this depression has not nearly been reached.

2008 Dec 03 12:35 PM