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How is recession in stock market?

Will a recession affect the stock market? If so whats the worst that can happen?

  • I have been hearing all about this recession that will be coming in the near future and I was wondering if the recession will affect the stock market and if so how bad will it get.

  • Answer:

    There is no guarantee that we will have a recession. Yes, it is possible, but it's not a sure thing. The stock market is normally affected, but it often starts to go down before the recession hits. A recession is at least two consecutive quarters of negative growth. Investors buy stocks based on their perception of future profits. Therefore, stocks will go down if a). sales and profits go down or b). investors simply believe that they will go down even if they turn out to be wrong. How bad will it get? No one knows because no one can accurately predict the future. Some recessions are worse than others. If any of us could predict the bottom, we'd all be out shorting the market and becoming fabulously wealthy.

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It might get very bad. There have been some really bad stock market sell offs in the past. The most recent in 2001. But prior to that some that were much worse. In 1974-5, stocks got murdered. IBM dropped from 365 to below 150. I do not recall how low it actually dropped to but it was below 150. And that was a very modest drop compared to how much some stock fell. At the bottom the average pe ratio was about 5. Think about that.

muncie birder

the stock price tumble, business suffer and consumer will spend less. all in all, everyone will get affected, not just stock market.

BigBen

This is only an issue if you are going to cash out your stocks in the next few years. Otherwise, diversify and if you don't like the risk, take some money out and make 6% on it.

Stephen

Yes a recession will affect the stock market. People can lose their jobs, careers and future. The fortunate ones can recover. Cheers.

rutgersgroup

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