Technically, We Are in a Recession. Now What?

With back-to-back quarterly declines in GDP, we are currently in a recession based on the technical definition. GDP growth for the first two quarters of 2022 was -1.6% (Q1) and -0.9% (Q2). Going beyond the technical definition of a recession, it is debatable as to whether we are in a recession primarily because of the strong labor market. So, what is next for investors as the experts continue to debate the severity of the current recession or whether we are currently experiencing a recession at all?

Coming out of the ‘Great Recession’ which lasted 18 months from Dec. 2007 through Jun. 2009 led to a significant rise in the S&P 500 as the market returned over 26% for the remainder of the year. Also, the most recent recession due to the COVID crisis saw the S&P 500 return over 18% after being down significantly during 2020, specifically when the S&P 500 was down more than 20% in March of that year. Although the recession only lasted 2 months during the COVID crisis unemployment had soared to over 13%. In 2021, the S&P 500 continued to rise, posting a return of over 28%. So, for savvy investors, recessions typically have meant great opportunities to invest in the stock market, particularly with the right strategy.

Our flagship strategy has thrived during times when recessions have presented us with great opportunities to buy stocks at a discount. In 2009, after coming out of the ‘Great Recession’, our flagship strategy was up over 100% and it also finished 2020 with a return over 70%. Having the right strategy that can precisely focus on those characteristics that are indicative of future outperformance versus the overall market is key. Not only should a worthwhile investment strategy have a good offense, but it should have a great defense as well. Our large Cap focused approach is up over 5% for the year while all major indices are significantly down for the year. Investment strategies that emphasize a strong focus on common sense and investment fundamentals will always be in style. From our perspective, investors should not allow current market conditions to dictate which investment style they choose. Investors should choose the strategy that always makes sense in any environment. That strategy should focus on buying the best stocks available which display winning fundamental characteristics at the best prices regardless of sector or industry representation.

Any investors looking for stability of investment returns and impressive performance over time should consider joining “The Collective.” We are always available to discuss our winning approach with those seeking an advantage over the typical market indices. If you want higher returns and lower market risks versus major market indices, then our approach is right for you.