What happened to the upcoming recession everyone was talking about?

During a recession, there is a contraction in gross domestic product (GDP), a rise in unemployment rates, a decrease in consumer spending, and a decline in business profits.

7/4/2023

a glass walled building with a large glass window
a glass walled building with a large glass window

What happened to the upcoming recession everyone was talking about?

I remember hanging out with my friends one Friday evening in October of 2022 sipping some beer at my house and watching some NBA games. My portfolio was down about 20 percent at that time but I was not too worried as I was a long-term buy-and-hold investor and contributing a percentage of my paycheck every month to my diversified ETFs. Jack, one of my friends, suddenly asked us if we were preparing for the upcoming recession and what are our plans and strategies to make the most out of this situation. He has been hearing on TV and social media that we will be in a serious recession soon and that millions of people would be losing their jobs and houses soon. He was more worried about not being able to find an internship during the summer. We have been hearing the same thing about an upcoming recession over the last few months but hearing that from Jack surprised us. Jack was the younger brother of my friend and he was in his 2nd year of university. He had no income and had never invested in the stock market at this point. His knowledge of the stock market is limited to the conversations he usually hears when I and his brother discuss about stocks or crypto.

I realized one thing that day. " When you hear everyone talking about a recession, that`s when you know there will not be one."

Today, the stock market has since risen back up and is almost reaching new highs. So what had happened and what made people be so pessimistic?

The SNP500 peaked at 4,796 at close on January 3 2022 and had dropped 23.55% to 3,666 by June 16, 2022.

As part of the global decline in most risk assets, the price of Bitcoin collapsed 59% during the same time period, and 72% from its November 8 2021 all-time high. The price of Bitcoin dropped below $16,000 in November 2022, a year after it reached a record high of $69,000.

The media created such a very negative atmosphere that everyone started to believe in that. Every content creator on youtube and finance gurus were making content about the upcoming recession and how we should sell all our stocks before the huge drop. From this article, it states that humans, it turns out, have what social psychologists call a “negativity bias”: We tend to pay more attention to bad-seeming information than good-seeming information. That could be a root factor for why the news is so goddamned depressing. That’s what we’re looking for.

Companies had started laying people off and negative articles were popping up every day.

Here are some stories by "experts" in the industry and economists predicting things about the economy. This is not to make fun of them but to prove to you that no one has a clue what will happen in the future. Experts are wrong all the time.

Here is the title from CNBC published on August 22, 2022

Here is another one from CNBC published on November 15, 2022

Here is an article from the Washington post published on October 31, 2022

Articles like this were starting to surface about the upcoming housing market crash similar to the 2009 crash.

Even, Michael Burry, a famous American investor and hedge fund manager who gained significant fame for predicting and profiting from the 2008 subprime mortgage crisis tweeted this.

In November 2023, this article came out from Morgan Stanley who is considered one of the leading financial institutions globally, along with other major investment banks. It operates in various countries and serves clients across the world.


Since all these articles came out at the end of 2022, the stock market has been on an uptrend. Today the SNP 500 is trading at 4455 (almost at all-time highs) and bitcoin is almost at 30 000. (doubled in value). How could everyone be so wrong?

The situation today in July of 2023 is different from all the predictions. The companies that have laid off employers have seen their stock market price skyrocket.

Why were there no negative articles when the SNP500 was at an all-time high of 4796? After 6 months of decline, suddenly everyone was so pessimistic? Today it is safe to say that all experts, economists, financial gurus, and influential content creators were all wrong about this.

Warren Buffet once said, "Be fearful when others are greedy and greedy when others are fearful."

Conclusion: WE SHOULD HAVE BEEN GREEDY WHEN OTHERS WERE FEARFUL. Staying employed and keep investing in the market whether the market goes up or down is the way to go.

Studies have shown that the average investor barely manages to outperform inflation, with a 20-year annualized return of just 2.9% - the reason is because they invest when the market is up, and stop when the market is down. Had they just continued to dollar cost average, they would've come out profitable long term.