The Compound: Staying Bullish On Stocks Through Economic Pain
With market sentiment turning bearish, it’s important to consider a few factors. One is how much markets can sell off. Another factor is whether or not the downturn is short, or part of a longer-term swing lower.
Over the past few years, fears of a recession have been on the rise. In 2022, some estimates calculated a 100% chance of a recession in 2023. It didn’t happen. Nor in 2024. Now, in 2025, some economic data hints at another recession.
Time will tell if that’s true or not. But even in a recession, investors can likely see their best returns in the stock market.
The current economic pain relates to moves to shrink the size of government. What that means a lower GDP in the short-term, it does move away from relentless deficit spending.
And while that could technically mean a recession, it could mean a stronger economy afterward.
So far, with earnings season winding down, the private sector remains strong. The AI trend remains intact. And many companies and countries are moving to invest in the U.S.
Amid those factors, it’s a sign that investors may want to scale back on leverage right now. But they shouldn’t stay out of the market entirely. Especially given the private sector’s AI-fueled growth right now.
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