Investing during slowdowns or recessions

Finding Opportunities: When the Stock Market Has Done Well During Recessions

Should I be investing if there is a downturn or recession looming? As a financial advisor, it’s a question I’m asked frequently. Truth be told, as it rises and falls, the stock market can present unique opportunities for investors, even during recessions. History has shown us that while economic downturns can be challenging, the stock market can perform well during these periods. This allows savvy investors to potentially make gains and build wealth.

One of the most notable examples of the stock market doing well during a recession was the Great Recession of 2008. Despite the economy's struggles, the stock market recovered and reached new heights by 2013. Government intervention and stimulus packages helped stabilize the economy and improve investor confidence, providing investors with significant opportunities for growth.

The 1980s are another primary example of the stock market performing well during a recession. Despite high unemployment and inflation rates, the stock market grew steadily throughout the decade. This was mainly due to decreased interest rates and tax cuts that helped stimulate economic growth, providing investors with lucrative opportunities to invest in stocks and reap the rewards.

Examples of Success in Slower Times

Numerous examples exist of individual stocks or sectors performing well during a recession. For instance, during the COVID-19 pandemic, while many industries were struggling, technology companies such as Amazon and Netflix saw significant growth as people turned to online shopping and streaming entertainment. Investors who recognized these trends were able to capitalize on them and make gains in their portfolios.

It is important to note that investing in the stock market always carries a certain level of risk, and it is essential for investors to carefully consider their financial situation and goals before making any investment decisions. However, during recessions, opportunities that may not be available during more stable economic periods can arise. Investors can make gains and build wealth even during challenging times by staying informed, doing thorough research and consulting with financial professionals.

While recessions can provide opportunities for investors, working with a financial advisor to navigate the risks and potential rewards of investing in the stock market during challenging economic times is crucial. By partnering with a knowledgeable and experienced financial professional, investors can develop a wellinformed investment strategy that’s tailored to their unique financial situation and goals. With careful planning, thorough research, and the guidance of a trusted advisor, investors can make gains and build wealth during recessions while mitigating risks and achieving their financial objectives.

David Jackson, MBA, CFP^®, C(K)P™, is the Managing Partner at the Southern Springs Capital Group. For more information on Southern Springs Capital Group, visit www.southernspringscapital.com. Our offices are located at 2555 Meridian Boulevard in Franklin. We can be reached at 615-905-4585.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Southern Springs Capital Group is not a registered broker/dealer and is independent of Raymond James Financial Services.

Any opinions are those of Southern Springs Capital Group and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance is not indicative of future results. Diversification and asset allocation do not ensure a profit or protect against a loss.

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow”, is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions.