Recession Fears Have Peaked. And It Could Be A Good Thing For Stocks

Recession Fears Have Peaked. And It Could Be A Good Thing For Stocks
Jonathan Hobbs

11 months ago1 min

Big money managers are feeling less pessimistic (or, is it more optimistic?) about the economy, according to Bank of America (BofA)’s January Global Fund Manager Survey. The monthly survey gauged responses from over 250 institutional investors, collectively managing over $700 billion in assets.

This chart shows the percentage of fund managers who said there’d be a recession in the next 12 months. And while a big chunk of them (68%) say they still see one in the cards, that’s down from 77% in November’s survey. In other words, November was (so far, at least) the peak of recent economic dread. Now, the recent recession worries never reached as high as they did in March 2009 (global financial crisis) or April 2020 (Covid crisis). But looking back, those earlier peaks would each have been fantastic times to buy stocks – you’d have pretty much bought the bottom of each crisis.

And it makes sense when you think about it: markets are forward-looking, meaning they tend to react more to future economic expectations than what is actually going on at the time. So in the case of the last two crises, as soon as those recession expectations started to ease off, investors started bidding up stock prices.

The S&P 500 is currently sitting at about the same level it was during the November survey. So if you think November really was the peak of economic concern, then you’ve got a good reason to consider buying stocks now. And if you’re wondering what fund managers were thinking when stocks started rebounding last October, I wrote all about that here.



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