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Ben Carlson

Don't Try to Predict the Next Recession

The economic machine doesn’t operate on a set schedule.
Enjoy the ride.

Enjoy the ride.

Photographer: Daniel Berehulak/Getty Images

Predicting a bear market can make you famous in financial market circles, but it’s certainly not an easy feat. Markets never follow the same script more than once, so trying to predict a peak in stocks is more about forecasting human emotions and sentiment than figuring out a precise formula or equation to follow. And people are unpredictable, to say the least.

There are a number of variables that could cause stocks to tumble, but the highest-probability event is simply an economic contraction. Stocks don’t need a recession to go into a bear market, but a recession increases the probability of seeing a bear market if we’re using history as a guide.