Recessions and Bear Markets | Wisdom, Wealth, and Wellness

Jonathan Satovsky
CFP®, ChFC®, CIMA®, CPWA®, CDFA®, DACFP

Good morning, good afternoon, good evening. Depending on the part of the world you’re in. This is Jonathan Satovsky of Satovsky Asset Management and on today’s episode of “Seeking Wisdom, Wealth, and Wellness,” I want to talk about recessions.

So, recessions or bear markets, let’s talk about the bad stuff for a moment. There have been quite a few over the last hundred years and a bear market is considered a 20% decline in an asset class or in a market, and that creates a bear market. People get very pessimistic because most people have recency bias—what’s transpired recently, people extrapolate into the future—while things are bad, they’re going to keep being bad, if things are good, they’re going to keep being good. It doesn’t ever happen quite that way but it does go to extremes. People over extrapolate down and over extrapolate up.

So, a recession is considered two quarters in a row of negative gross domestic product—negative growth in an economy. And I would venture to say that the US was likely to experience two quarters of negative growth, but that’s not the end of the world. It’s not like two quarters is going to turn into four quarters, turn into eight quarters, which turns into twelve quarters, and it’s going to perpetuate. There’s a self-correcting cycle that does occur.

That being said, the time and duration matters because most people can handle short recessions, but most people, no matter how optimistic and confident they are about the future, after a period not just of three months, six months, nine months, 12 months—if they go through 18, 24, 36 months of extended, grueling, challenging, difficult, negative experience, it’s harder to see the other side. It’s harder to visualize the optimistic.

So brace yourself for the worst. Assume that three or four-year dry spells are gonna happen in the world and then the upside will take care of itself. And that’s your lesson on this episode of “Seeking Wisdom, Wealth, and Wellness.”

Have a great day.

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Video Recorded June 27, 2022
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Disclosures

This blog post is not intended to be, nor should it be construed or used as, an offer to sell, or a solicitation or offer to buy any securities or interests in any strategy offered by Satovsky Asset Management, LLC (“SAM”). SAM is a registered investment advisor with the Securities and Exchange Commission – for more information see www.adviserinfo.sec.gov. Please remember that different types of investments involve varying degrees of risk, and that past performance is not indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the strategies recommended or undertaken by SAM) will be profitable. Market index information shown herein is included to show relative market performance for the periods indicated and not as standards of comparison. The market volatility, liquidity and other characteristics of SAM’s portfolio composition are materially different from the securities listed on public market indices. Market index information was compiled from sources that SAM believes to be reliable. No representation of guarantee is made hereby with respect of the accuracy or completeness or such data. Opinions are as of date of video and are subject to change. A copy of SAM’s current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request. SAM undertakes no duty to update information presented herein.

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