“History tells us—though certainly that’s no guarantee—that going forward we are likely to experience a recession, not just a bear market,” said Sam Stovall, chief investment strategist at the New York-based CFRA Research. Yet at the moment, he added, we’re actually at the beginning of a fairly positive seasonal upswing.

Stovall made his comments during a virtual conference called “Investing in Inflationary Times,” co-produced by Financial Advisor magazine and MoneyShow on Tuesday. Stovall’s session was called “The Bump After The Sophomore Slump.”

Between mid-October and mid-November this year, Stovall explained, the S&P 500 fell more than 20%. But defensive sectors fared better. Energy alone posted some 40% gains.

None of which was terribly surprising, given the jump in inflation—which can be damaging to both the economy and share prices, he said.

The markets also don’t like high interest rates, which prompt investors to “look toward bonds as a more attractive substitute,” he said. “The higher interest rates go, the less investors are willing to pay for the stock market.”

Stovall noted another unusual problem in 2020: It was one of only three times in the past 20 years that we’ve had declines in both stock and bond prices.

“Interestingly, in those other two times, a 60-40 portfolio fell by less than 5%. … This time, a 60-40 portfolio was off about 20%” since bond prices fell along with stock prices.

Stovall made some predictions. Using historical data, he showed that bear markets coinciding with recessions tend to fall farther and last longer than bear markets without recessions.

And our current recession is likely to continue at least into next year, he said. CFRA projects ongoing global GDP declines in 2023. In advanced economies like the U.S., GDP is expected to be less than 1%. Developing economies, however, will suffer less drastic declines. They are expected to post GDP of 3.6% in 2023.

Even through this seeming pessimism, Stovall sees some opportunities. The dollar is expected to continue showing strength next year, he said, as are oil prices.

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