Stock market performance during recessions
Print This Story
April 18th, 2009 by Prieur du Plessis, Investment Postcards from Cape Town
Twitter It! | Email This Article
Chart of the Day provides some perspective on stock market performance during a recessionary period.
The chart below illustrates the average performance since 1945 of the S&P 500 Index following the beginning of a recession (blue line). For comparison, the chart also presents the performance of the S&P 500 following the beginning of the last recession (which began March 2001 - gold line) and the current recession (which began December 2007 - red line).
“As the chart shows, the stock market has tended to decline for several months preceding and six months following the beginning of a recession. Stock market performance following the commencement of the last two recessions has been much more severe than average both in magnitude and duration,” said Chart of the Day.
The study is interesting but we are dealing with an extreme event, and “average” historal patterns unfortunately do not provide much guidance regarding a turning point for this particular situation.
Source: Chart of the Day, April 17, 2009.
Dr. Prieur du Plessis is an investment professional with 26 years' experience in investment research and portfolio management. More than 1,200 of his articles on investment-related topics have been published in various regular newspaper, journal and Internet columns, including his blog, Investment Postcards from Cape Town. He has also published a book, Financial Basics: Investment. Prieur is Chairman and principal shareholder of South African-based Plexus Asset Management, which he founded in 1995. The group conducts investment management, investment consulting, private equity and real estate activities in South Africa and a number of foreign countries. He also serves as Honorary Consul of Slovenia for South Africa, actively developing economic, cultural and scientific relations between Slovenia and South Africa. Prieur is 54 years old and live with his wife, television producer and presenter Isabel Verwey, and two children in Cape Town, South Africa. His leisure activities include long-distance running, traveling, reading, motor-cycling and scripophily. Read more from the author/contributor here.
Related Posts
Tags: Commencement, Duration, Extreme Event, Gold Line, Guidance, Magnitude, Perspective, Presents, Recession, Recessions, Red Line, Six Months, Source Chart, Stock Chart, Stock Market Performance, Stock Performance, Turning PointPosted in Gold, Markets |
