InsiderFlow › Glossary › What is a recession?
A recession is a prolonged economic contraction: falling GDP, rising unemployment, consumption and investment stalling.
The most used technical definition: two consecutive quarters of falling GDP. In the US the official referee is the NBER, which weighs employment, income and production. Recessions are a physiological part of the economic cycle: since the 1950s the US has been through about ten.
For stocks the relationship is treacherous: markets anticipate. They often crash before the recession is declared and climb while data still looks terrible — buying "when there's blood in the streets" is easy to say, brutally hard to do.
On InsiderFlow these concepts come alive on real data: what big funds and insiders are buying, explained every day.
Poorly: the most famous indicator (an inverted yield curve) has preceded many recessions but with unpredictable timing, and sometimes falsely.
The honest answer: don't try to guess. Diversification and a long horizon beat market timing almost every time.