[alnorth]

Another common misconception is the thought that after we do go into a recession (or merely a period of weak growth), many people think that stocks will then go down because of that.

Thats not really true, because the market does not wait for long-expected events to happen, they anticipate future events. It's already been priced in, the stock market got hammered this year already because the market thinks we will go into a recession. If that happens, it wont be news. What would be news is that the assumption was wrong and we didnt go into a recession (huge rally), or after the recession is "official", whether it will continue for a full year or end after only a couple quarters. That would be news.

If you are selling or staying out, you arent betting on us going into a recession, because its too late for that, thats already been priced into the market. If you wanted to bet on a recession, you needed to sell about 4-6 months ago. By selling/staying out now, you would be betting that we stay in a huge recession for a year or longer. If we get the news in 3 months that a recession did in fact occur but the analysts decide its going to be a short recession, the market would price that expectation in for a big jump in spite of the fact that the good news hasnt officially happened yet.

All of that is only relevant to market timers, of course. If your going to be a long-term buy and hold investor with more than 10-15 years remaining till retirement, you shouldnt really care about this minute-by-minute short-term stuff unless you think the US will be in the toilet in 15 years.