Stocks perform badly during recessions?

"It is a common misconception that stock markets perform badly during recessions and the evidence of the last few recessions suggests otherwise. We looked at equity market returns on a quarterly basis leading up to and during recessions over the past 40-60 years. Data from US (back to the late 1940's - six recessions) shows the same pattern again and again: equity markets fall, sometimes sharply, before the recession, as growth momentum slows.

Sometimes, stocks are still falling during the early stages of a recession, but often they have started to recover even as the recession begins. In every single case, equities actually recovered during the recession, often showing very strong performance. Woe betide the investor who was too defensive going into these rapid turnarounds in market fortunes."

quote from: VII IM (http://www.7im.co.uk/)

By Franky