Perspective on Recessions

Recessions are a normal part of our cyclical economy. This time is almost always different. That shouldn't be the reason you deviate from your investment plan.



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Last week, we looked at the prior 40 years of market declines. This week, we will put the current decline in economic activity into a long term historical context. In this graph, on the y axis, we have the length of recessions in years. And on the x axis, we have a timeline going back to 1910, to include the Great Depression, as the first visual, the size of the bubble reflects the severity of the recession, we can see that both in length and size, the great depression or outweighs anything we've seen since then, we can also see that since the Great Depression, there have been no recessions that have lasted longer than two years. Lastly, as we look at the current decline in economic activity, we can see that it is both very short in length, but significant in severity. As usual, I doubt there's any predictive value in exercise like this. And while we're clearly not out of the COVID Woods yet, it's not hard to look at a graph like this and complete clew that while certainly acute nature, the current recession isn't out of the scope of past experiences with our weekly refocus, we strive to tune out the short term noise provided by wall street in the media so that we remain focused on the long term so that we can capture the returns markets provide.

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