I was driving out to a client meeting on Friday afternoon when the voices of CNBC fearfully hollered from my car stereo. Typical... The US stock market was feeling pressure yet again.
Well prepared, and early, for the upcoming meeting with a younger investor with a long time horizon, I pulled of the road to catch-up with some emails. A very helpful piece had come across my inbox entitled, Guide to Recessions (Capital Group).
Its contents have since served to be valuable for clients during conversations.
Feel free to peruse the guide yourself (by clicking here)...
Make sure you take a look at page 5, which tells a story of what happens to the stock market during recessions. The data reflects the average of completed cycles from 1950. Based on the numbers, the average equity market peak was 6-7 months prior to the economic cycle peak. After that economic cycle peak, the average time it took the S&P500 to rebound was about 3-4 months.
I would never advise timing the markets, but touché on taking the approach to dollar cost averaging in (especially if you have a long time horizon).
Enjoy!
-EV