Don't Wait for the Official End of the Recession

In his latest annual report to shareholders, Guru Charles Royce published some interesting statistics:

All the figures reflect cumulative total returns from the official start of the recession [a date only known after the fact] and through the last month of the recession as determined by the resumption of GDP growth. That date, by definition, is also known only after the fact.



There was no consistent over or under performance as related to cap size. What was glaring, though, was that 7 of the 8 measured total returns DURING the recessions were nicely positive numbers. Even the one negative was very minor.

Also noteworthy was the average duration of the most recent four recessions - an average of 9.5 months start to finish. Three of the four were eight months or less.

If the US entered a recession late last year [as is likely based on empirical data that has come in since year-end 2007], then we may very well be close to halfway through this latest one.

Since stock markets are leading indicators, we could be set for a pick-up in the averages pretty soon if this recession lasts the typical 6-9 months from inception.

Moral: Don't wait for the official end of the recession to load up on bargains. Share prices typically start rising about 6 months before the proclamation that "The Recession is Over" hits the airwaves.