In these days of significant market volatility, investors are looking for perspective.
In order to provide some framework for investors, we reviewed every recession over the past 50 years in the United States. Our analysis focused on identifying the recessionary periods, the number of months it took from the peak of the business cycle until the trough of the business cycle, as well as the number of months the business cycle expanded post-recession.
We calculated the mean trough period as well as the mean expansion period.
Additionally, using the S&P 500 Index as the source of the data, we analyzed the equity market’s peak-to-trough decline, its trough-to-peak gains, and the market’s ability to anticipate both the recession and the expansion.
What follows are the results of our research.
We are very aware that many features of the current downturn are unprecedented, but historical comparisons can still be helpful for perspective that economies and markets have adapted, adjusted, and recovered in past cycles.
For informational purposes only. Not an investment recommendation.
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Diversification does not guarantee a profit or ensure against loss. It is possible to lose money in a diversified portfolio.
Consider these risks before investing: International investing involves certain risks, such as currency fluctuations, economic instability, and political developments. Investments in small and/or midsize companies increase the risk of greater price fluctuations. Bond investments are subject to interest-rate risk, which means the prices of the fund’s bond investments are likely to fall if interest rates rise. Bond investments also are subject to credit risk, which is the risk that the issuer of the bond may default on payment of interest or principal. Interest-rate risk is generally greater for longer-term bonds, and credit risk is generally greater for below-investment-grade bonds, which may be considered speculative. Unlike bonds, funds that invest in bonds have ongoing fees and expenses. Lower-rated bonds may offer higher yields in return for more risk. Funds that invest in government securities are not guaranteed. Mortgage-backed securities are subject to prepayment risk. Commodities involve the risks of changes in market, political, regulatory, and natural conditions. You can lose money by investing in a mutual fund.
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