Recession not confirmed after bear markets, though more likely
It seems that the end to a record long market expansion is now dawning upon as a reality. Though, the entering the bear market is not always something that refers to a recession. There is a history which does show that.
On this week, the Dow Jones and S&P 500 has entered the bear markets which is going to enter the 11 year run for expansion. The bear market has market the decline of 20% from the record highs. The stock market is a mechanism which is forward looking, the stock markets are usually sending warnings about it before there is an evidence of shrinking growth in the data.
There are still a lot of instances where the recessions have not been accompanying the bear markets as per the data from the companies.
The good news as per the expert strategists is that not every bear market actually occurs in the time of recession. It is also a fact that when economy has been avoiding the recession, the stocks have right close to 20% down in the last few bear markets.
In the year 1987, the S&P 500 has seen a tanking of 22% in the black Monday crash when they are suffering their highest percentage loss ever. The bear market has lasted for just four months and United States economy has been avoiding a major downturn.
The recessions have also not occurred in the bear markets in the years such as the year 1961, 1947 and 1966.
For being sure, the majority of bear markets recently above the percentage level of 70% have been accompanied by the recession. The last three bear markets in 1990, 2000 and the year 2008 have all seen recessions.