Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

War Profits
Revealing a Potential 33x
Opportunity in Defence

**Important: We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
**By submitting your email address, you also sign up for Profit Hunter, a Free-for-life newsletter from Equitymaster,
which offers the most profitable investing ideas in India.



A recession is a period when the economy of a nation contracts. In other words, business activity shrinks instead of expanding.

In economics, a recession is generally a period of at least two consecutive quarters of negative GDP growth. They are usually preceded by a period of strong economic growth, over investment, and over consumption.

During a recession, the GDP of an economy falls, income levels of people go down, there is an increase in unemployment, along with a decrease in industrial production and consumption.

It's a financially difficult time for a most of the population.

Economic indicators that could point to a recession are closely watched by governments and economists. Yet it's not easy to predict a recession in advance.

This is due to the fact that large economies are also very complex. It's not always possible, even for economists, to identify the factors that will trigger a recession.

However, once a recession hits, it's obvious to everyone.

Recessions can be short (less than a year) or long (a few years). They can also be deep (huge declines in GDP) or shallow (small declines in GDP). Long recessions can even have periods in between with short-lived positive GDP growth.

It's important to understand that recessions are a normal part of economic activity. Every boom phase in an economy is followed by a bust.

Recessions cause inefficient businesses to shut down. Banks reduce their lending and tighten their credit policies. Companies reduce their fixed costs and become more efficient.

The pain caused by recessions is temporary as the economy bounces back. Businesses emerge stronger with low debt, strong balance sheets, and good cash flows.

However governments don't like recessions. This is due to the high unemployment that it causes. They tend to intervene with policies to stimulate the economy. These include low interest rates and higher spending on infrastructure and social projects.

In recent times governments and central banks have directly infused money into economies by sending cash to people's back accounts and buying corporate bonds.

How the Crude Oil Price Collapse Will Impact India. 5 Points...

Aug 9, 2022

Crude oil prices keep falling amid fears of recession, demand-supply dynamics, among other reasons. Find out how it impacts India.

The 4 Crises that Could Hit Your Portfolio and How to Deal with Them

Aug 2, 2022

Long term investors need to know about these 4 potential crises that could hurt their portfolios.

5 Takeaways from Infosys Q1 Results

Jul 25, 2022

Infosys beat street estimates on the revenue front but disappointed on profit and margins.

Why Wipro Share Price is Falling

Jul 15, 2022

Wipro has fallen 10% in a month and is down by 40% on a YTD basis. What does it have in store for rest of 2022?

What the Massive Selloff in US Tech Stocks Teaches Us About Investing

Jun 22, 2022

Tech stocks in the US have crashed. What can we learn from this episode?

The Coming Global Recession - Will India Buck the Trend?

May 28, 2022

Central banks have been raising interest rates to try and rein in inflation but many wonder if the knock-on effect of this will be a recession.

Here's What You Need to Know about the Fed's Rate Hike

Jun 17, 2017

Expansions don't go on forever. They need to rest from time to time. We don't know when the next recession will show up, but we know this...

Sell stocks. Buy Gold.

Sep 21, 2016

The chart says it all...

Here's A Solution To The Global Financial Crisis

Jul 15, 2009

Nassim Taleb offers a unique solution to the present crisis. Roubini says recovery has slowly begun. Buffett would buy stocks in recessions. Pranab Mukherjee says reforms on.

Why the Sensex Could Hit an All-Time High in August

Aug 8, 2022

Is a new all-time high coming to a stock market?

When Will Gold and Silver Prices Recover?

Jul 28, 2022

How long should we wait for a recovery in gold and silver? Find out...

5 Indian Companies with Over 7% in Dividend Yield

Jul 20, 2022

As fear of a recession looms, these stocks could offer major upside.

Why IT Stocks Are Falling

Jul 12, 2022

Growing concerns of recession in the US among other reasons have sent the India IT sector tumbling. Read on to know more...

Why the Indian Stock Market is Falling

Jun 14, 2022

Indian stock market has been in a downtrend. Here's why...

5 Buffett and Munger Quotes that Will Change Your Thinking

May 5, 2022

Here are the five key takeaways from Berkshire's latest AGM. These pearls of wisdom will change your thinking for good.

A Broken Bond - II

Sep 24, 2016

What is the Japanese Bond market telling us about the future?

Should you buy 'recession proof' stocks?

Sep 14, 2011

Today's 5 min wrap up talks about how the current environment may not be the most conducive to buy recession proof stocks

The Indian Rope Trick.

Apr 3, 2008

The Honest Truth by Ajit Dayal