Animal Spirits: Is a Recession Bullish?

Every recession is different. But many investors know that buying during a recession can create a lifetime of wealth. Does that make a recession bullish? Potentially.

However, there are a number of risks involved. One is the risk of buying too early, and sitting on early losses for some time until markets turn around. Plus, with inflation running so high right now, a loss could be compounded by a loss in purchasing power.

History shows that markets tend to start recovering before the overall economy starts to move higher. That’s a big reason why many see a recession as bullish for stocks.

It allows them to buy a big dip in stocks before the next move higher. And those looking to the future with an outlook measured in years should be fine.

With the US dollar looking so strong right now, the best recession buys right now may come from international companies. That’s because a strong dollar makes other currencies look cheap.

That’s true with the Euro, which has been trading at par with the dollar for the first time in 20 years.

As currencies shift back away from their defensive moves right now, investors can potentially see a tailwind lift international stocks first.

Investors can always find an opportunity, no matter what the market is doing. A recession brings more values out of the market than during a bull market.

To listen to the full interview, click here.