1982 recession stock market performance during

1982 recession stock market performance during

Posted: K&SA Date of post: 30.05.2017

Economic growth rates or stock market returns -- this chart could apply to both. With the intense focus on the stock market, it can be easy to forget that the market is one component of the economy; it's not the economy itself.

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It represents numerous economic players and entities, such as companies and pools of capital. A recession affects the companies whose shares make up the stock market, and it affects the people who invest in those companies' stocks. Psychology is as important as tangible effects. A recession is a slowdown or halt to the economic growth of the country.

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This can lead to unemployment and lower spending by individuals and companies. All the factors in a recession are intertwined. For instance, unemployment is likely to increase as companies try to boost their margins -- when people spend less because of the increase in unemployment.

The factors feed into one another in a declining spiral. Companies suffer from lower revenues, lower profits, and weaker growth in the future. All those factors come into play to determine the value of a stock on a fundamental level. As the companies' business suffers, so too does their stock price, leading the whole stock market lower.

Even if a company is weathering the storm of a recession well, investors might not trust this to continue. Investors also might not trust the overall market, because the entire market tends to have a general trend, although a single stock might run counter to the trend because of exceptional circumstances. When the whole stock market is declining, individual stocks decline as well. It might be considered prudent to then move to a cash position and liquidate all investments.

A resulting large-scale shift of money out of stocks can cause further stock market declines. The perception of a weak market can reinforce a weak market. The largest players in the market are institutions that might have capital pooled from numerous individuals.

As a recession carries on, people might pull money out of the market to meet basic needs, especially if they are unemployed.

1982 recession stock market performance during

Without a job, investment capital can quickly become savings. Fiscally conservative investors who lose faith in the stock market as a viable investment might abandon stock market investing. This is different than the temporary move to cash that can result from the expectation that the stock market 1982 recession stock market performance during continue to decline for a while. Government stimulus packages and actions by the Federal Reserve Board can have an effect on forex malaysia review stock market during a recession.

Federal stimulus programs can attempt to reverse the recession, although they might merely prevent it from worsening.

A stimulus can help the market by giving an infusion of cash to individuals, local governments, and certain companies. On a wider scale, the Federal Reserve can institute bond buying to infuse capital into the economy to get money flowing. This can inflate stock prices while a recession is still raging. An forex courses vancouver of this would be the boost the stock market got from "quantitative easing" -- the Fed's buying up of mortgage-backed securities to increase the money supply.

Nihar Patel covers finance and investing for several online publications, including Seeking Alpha. He also runs his own investment analysis website.

Patel holds a J. Each week, Zack's e-newsletter will address topics such as retirement, savings, loans, mortgages, tax and investment strategies, and more.

At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to linear regression curve indicator mt4 investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. These returns cover a period from and were examined and attested by Baker Tilly, an independent accounting firm.

Visit performance for australian dollar currency rate in pakistan about the performance numbers displayed above.

Skip to main content. More Articles Bond Performance During Recessions List scotia bank forex rates Stock 1982 recession stock market performance during Indexes What Is a Stock and How Do Stocks Affect the Economy? The Effect of Interest Rates on Stock Market The Impact of Stock Trading on the National Economy How Does the Stock Market Influence our Economy?

1982 recession stock market performance during

Recession Hurts the Economy, Hurting Companies A recession is a slowdown or halt to the economic growth of the country. Economic Malaise Erodes Investor Confidence Even if a company is weathering the storm of a recession well, investors might not trust this to continue. Financial Need Can Result in a Flight of Capital The largest players in the market are institutions that might have capital pooled from numerous individuals. Spurring Government Action Government stimulus packages and actions by the Federal Reserve Board can have an effect on the stock market during a recession.

References 3 Federal Reserve Bank of Atlanta: Stock Prices in the Financial Crisis CNNMoney: Federal Reserve Launches QE3 The Wall Street Journal: Markets Swoon on Recession Fears. About the Author Nihar Patel covers finance and investing for several online publications, including Seeking Alpha. Recommended Articles The Average Return on the Dow Jones During Its Lifetime Government Regulations on the Stock Market The Role of the Stock Exchange in the Economy Does the National Trade Deficit Have an Impact on the Stock Market?

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