Will the Next Recession Cause a Stock Market Crash?
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Will the Next Recession Cause a Stock Market Crash?


Hi, and welcome to The Bottom Line! In this
video, we’re going to explore what a recession is and whether or not the next one could
cause the U.S. stock market to crash. It’s important to understand that a recession
is an economic term that refers to a general slowdown in economic activity. It’s usually
defined as two consecutive quarters of negative GDP growth. Recessions are tricky to predict
because they typically start before anyone knows they’re happening and end before economists
have enough data to know that they’re done. It’s also worth mentioning that they’re usually
pretty short. Since the end of the Great Depression, there have been 13 recessions in the U.S.
and nine of those lasted less than one year. While the effects of a recession often cause
the stock market to fall, recessions don’t cause stock market crashes. Stock market crashes
are sudden drops of stock prices, and they’re unusual events that are often driven by panic.
In general, the stock market tends to follow the U.S. economy. There are countries all
over the world that are dealing with all kinds of economic issues right now. For example,
China is experiencing its worst manufacturing output in more than 17 years, and Germany’s
GDP is shrinking. Meanwhile, the U.K. is dealing with a laundry list of issues surrounding
Brexit, and Italy is already in a recession. Even with all of those problems, the U.S.
stock market has performed incredibly well. Generally speaking, as long as the U.S. economy
is strong, then our stock market will be strong as well. Of course, when a recession does come along,
the stock market tends to react negatively. The stock market’s average return
during recessions dating back to the mid-1950s has been negative 1.5%. But that doesn’t mean
that stocks get crushed during a recession. In fact, the market actually posted gains
during four of the last eight recessions. It’s also important to remember that stocks
tend to perform very well in the years immediately following recessions. On average, the S&P
500 generates total returns of more than 15% in the year after recession ends, and 40%
in the three-year period following the economy’s return to growth. So, what should
investors be doing as worries of a recession rise? Because it’s impossible
to predict with accuracy when a recession will occur or how long it will last, trying
to time a recession is generally a bad idea. Unfortunately, one of the biggest mistakes
people make during a recession is to sell their stocks after the market has already
fallen sharply because they expect it to fall even more. The stock market then starts to
recover before people are ready to reinvest, resulting in them missing out on the market’s
recovery. The bottom line is that recessions are going to happen, and they’ll most likely
negatively affect the stock market; but those negative effects will probably be short lived,
which is why you should invest in businesses that can make it through the tough times and
then hang on to those investments for the long haul. Thanks for watching
this video! Do you think the next recession will cause a stock market
crash? Let us know in the comments. If you liked this video, click the thumbs up button
and subscribe to our channel. It helps us reach more people, which allows us
to make more awesome content.

About Ralph Robinson

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30 thoughts on “Will the Next Recession Cause a Stock Market Crash?

  1. My only concern is if we can truly trust or know what is accurate when we are told the businesses are thriving, but we still see factories laying off 1,000's and relocating is still happening despite being told they weren't. I relate that and other items with the last one, where professionals were telling us we're in a recession, but the government would not. Then literally overnight after many weeks, they did. It seemed to have made matters worse for businesses that relied on the government to tell them the truth, but were late in doing so. This administration seems to enjoy not telling the truth and again, the professionals have raised the flag. I'm hoping they are not making the inevitable worse!

  2. The only reason we haven’t lived 1929 again is because of the printing of money whenever the government wants to. When we have a little set back caused by a few executives and CEOs, just like magic, more money gets printed and everyone gets bailed out. No one goes to jail and the 9 to 5 sheep, keep slaving away trying to collect more devaluated US dollars. The cycle has been rinse and repeat….

  3. Or we could just wait till the recession happens and invest because at that time sock prices would be duty cheap and after the recession I'll be duty rich

  4. Right now I'm sitting on 60% cash because I dont know what to invest in. Going to be patient and wait for a good opportunity

  5. Recessions are usually short lived, but…… the World is changing.

    China's "President-for-life", Xi Jinping, is a Leninist who has no interest in negotiating a level playing field for trade and business, either domestically or internationally.

    The developed world won't just sit idly by while companies, subsidized by the Chinese communist party, continue to nudge their way into nations while China continues to protect itself from competition from them.

    Globalization is coming to an end, thanks entirely to Xi.

    The next recession will likely last for some years.

  6. Three out if four fake economists lying about recession. Fake news on parade 24/7 365 and still getting their leftists ass kicked.

  7. I have a question guys , should I sell before crash and buy back all my positions or just still buy more when crash ?

  8. way to strong! Only way is if the News panics everyone to believe in what they are trying to manipulate! Don't listen to the news, do your homework!

  9. The stock market is a casino, fundamentals don't make any sense. The best thing to do is to find undervalued companies with a good balance sheet and hope for the best, at this point in the market you're risking your money at these crazy valuations..The market makers bleed the retail investor until they pull out, then buy again..Rinse and repeat..

  10. Good luck america. Tired of winning yet?? The worst is yet to come so thamk trump for our winning streak and his dumbf. K voters for all these great dsys to come. Hope youve got your gun ready cause your gonna need a little head ache telief.

  11. What the video did Not explain is that "recessions" are created just like the Great Depression was created to make the rich Richer!! An article about the Fed tells take story. And recessions, are a good opportunity to get Rich. Good info!!

  12. If things go downhill so bad I will try to buy up alot destroyed assets, starting with DC comics. I want good stories again. But things have to get REALLY bad for this to be possible.

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