A recession can be a very stressful period. Some people lose their jobs, budgets tighten, spending decreases, markets get volatile, and investors get nervous as they see a portion of their portfolios apparently begin to evaporate.
Some investors panic and make the mistake of selling their stocks during a recession and lock in losses. But others know that recessions are a time to buy stock as they offer access to lower stock prices that can lay the foundation for tremendous returns once the economy recovers. The key to executing that last action successfully is to focus on buying stock in strong companies that can survive periods of soft demand and high unemployment.
No one knows when a recession will hit, but we do know there have been 18 recessions over the last century, so it’s likely to happen again. The wise investor will do what it takes to be prepared for this eventuality.
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