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Characteristics of a Recession and Market Declines

man looking down stock market selloff
Matt Ristuccia, MBA, CFA

Matt Ristuccia, MBA, CFA

Matt is Co-Chief Investment Officer

If we study the history of recessions and stock market declines we can see that the typical mild recession (slowdown) is a correction in the 20-30% range.  Many investors have a skewed view of recessions given that the last two were deeper than average.  The recession in 2000 started with bubble valuations and a commodity spike.  The recession in 2008 started with a commodity spike, an aggressive fed, and massive financial institutional imbalances.  We are seeing none of the above today.

                                                                                                                                                                                               Source: JP Morgan  

In addition, odds are still that we are in non-recessionary/cyclical bear market globally, but the risks of a mild recession (slowdown) have risen in recent weeks.  However, based on the data above, even in a mild recession a negative 20-25% return is what we would expect.  We were already 20% down from peak when the S&P 500 hit about 2350 in December.  Typically markets retest lows so don’t expect this volatility to abate quickly, but given the data above (as well as other indicators) we view this volatility as a chance to smartly reposition portfolios and take advantage of dislocations.

DISCLOSURE: Past performance is no guarantee of future results. Charts presented in this article are not indicative of the past or future performance of any Argent Wealth Management strategy. This article has been distributed for informational purposes only and is not a recommendation or offer of any particular security or investment strategy. Information contained herein has been obtained from sources believed to be reliable. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Argent Wealth Management. 

Argent Wealth Management is registered with the Securities and Exchange Commission (SEC) as a Registered Investment Advisor © 2018 Argent Wealth Management, LLC. All rights reserved.

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