Why Do We Lose Sleep Over Recessions?
By: Brian A. Magnan CFP®, AIF®
Director – Magnan Family Wealth Management
And here’s the kicker: even if you could time a recession, the stock market doesn’t care. It’s not synced to the economy. Equity prices can fall before a recession hits and rebound before it’s over. 2020 rolled in with the worst recession since the ‘30s, yet stocks were partying by December. Look at 2022—prices declined expecting an economic downturn that never showed.
If you’re scared, you’re not alone.
The unknown is spooky—it’s human to feel the jitters. Maybe you’re five years from retirement, or the current political vibe’s got you on edge. Those can crank up the worry dial. Our advice? Stick to a plan, refresh it yearly, and keep enough in reserve to ride out the storms.
It’s fine to feel the fear. It’s not fine to let it derail your game plan.
Update your plan, dust off your shoulders, and charge ahead.
Director – Magnan Family Wealth Management
Why do we lose sleep over recessions? From where I stand, they are:
- Inevitable - baked into the economic cycle.
- Unpredictable - beyond our grip.
- Manageable - we can prep for the ride.
Countless words have been spilled, endless talks given, and hot takes flung about recessions. The financial world and media can’t get enough—they’re obsessed with debating the next downturn. To me, it’s white noise that never fades. In my experience, even as the economy claws back from a slump, you’ll still hear whispers of a “double dip” lurking around the corner.
In my 30+ years as a financial advisor, recession chatter feels like a whole lot of sound and fury, signifying… not much.
Inevitable: Like ocean tides, the economy ebbs and flows. Companies and consumers swing from lean times to fat ones, underworked to overworked. Recessions aren't a glitch, they're a feature. They flush out the weak and spark new growth.
Unpredictable: Economists have been shouting “recession!” since 2021. They’re bound to be right eventually. Me? I don’t know when the next one’s coming. Neither do the Wall Street wizards, other financial advisors, or the folks in DC. Recessions are only clear in the rearview mirror—by the time it’s official, we might already be months deep.
Unpredictable: Economists have been shouting “recession!” since 2021. They’re bound to be right eventually. Me? I don’t know when the next one’s coming. Neither do the Wall Street wizards, other financial advisors, or the folks in DC. Recessions are only clear in the rearview mirror—by the time it’s official, we might already be months deep.
And here’s the kicker: even if you could time a recession, the stock market doesn’t care. It’s not synced to the economy. Equity prices can fall before a recession hits and rebound before it’s over. 2020 rolled in with the worst recession since the ‘30s, yet stocks were partying by December. Look at 2022—prices declined expecting an economic downturn that never showed.
Manageable: Employed or retired, we’ve got to plan for the dips. Our approach? A disciplined process that earmarks enough cash to cover your near-term needs when markets wobble.
If you’re scared, you’re not alone.
The unknown is spooky—it’s human to feel the jitters. Maybe you’re five years from retirement, or the current political vibe’s got you on edge. Those can crank up the worry dial. Our advice? Stick to a plan, refresh it yearly, and keep enough in reserve to ride out the storms.
It’s fine to feel the fear. It’s not fine to let it derail your game plan.
Update your plan, dust off your shoulders, and charge ahead.