There have been some discussions lately regarding the recession hitting various economies. This has left many investors confused regarding their investment strategy. Should they get out of their stock investments and stop making further investments in the stock market? Let’s find out.
All economies run through a business cycle from recession to depression to trough to recovery to expansion to peak and then again to a recession. This happens at regular intervals. But the time taken to complete the whole cycle - and the duration of each component of the cycle - may not always be the same.
The recession is the starting point for the reversal of a peak in a business cycle. It is not necessary that all the components will take place during a particular business cycle. It may also happen that a recession may be immediately followed by a recovery directly, without the economy going through depression and trough.
But first, let us understand what a recession is. A recession is a significant, widespread, and prolonged downturn in the economic activity of a country du...