Dimensional Fund Advisors Quick Take

The stock market often reacts to economic conditions well before official recession announcements are made, reflecting its forward-looking nature.

For instance, during the global financial crisis, the US recession lasted from December 2007 to May 2009, but the “in recession” declaration only came in December 2008—by which point stock prices had already fallen over 40%.

Conversely, when the recession ended in May 2009, the announcement came 16 months later, long after stocks had begun to recover.

This history highlights how markets anticipate economic shifts ahead of the news. Investors who focus on long-term strategies rather than reacting to after-the-fact headlines may be better equipped to navigate volatility and achieve sustained success.

 

 

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