It is often said that one should never discuss religion or politics as you are going to wind up offending someone. In the financial world it is mentioning the “R” word.
The reason, of course, is that it is the onset of a recession that typically ends the “bull market” party. As the legendary Bob Farrell once stated:
“Bull markets are more fun than bear markets.”
Yet, recessions are part of a normal and healthy economy that purges the excesses built up during the first half of the cycle.
Since “recessions” are painful, as investors, we would rather not think about the “good times” coming to an end. However, by ignoring the risk of a recession, investors have historically been repeatedly crushed by the inevitable completion of the full market and economic cycle.
But after more than a decade of an economic growth cycle, investors have become complacent in the idea that recessions may have been mostly mitigated by monetary policy.
While monetary policy can certainly extend cycles, they cannot be repealed.
Given that monetary policy has consistently inflated asset prices historically, the reversions of those excesses have been just as dramatic. The table below shows every economic recovery and recessionary cycle going back to 1873.
Read the full article here: Recession Risks Are Likely Higher Than You Think | Real Investment Advice