If we are in a recession — and we won't know we're in one until well after it's begun — stocks probably still have a long way to go down. Worries are high that the sharp slowdown in China's growth, falling U.

Investors are scared enough that they're already pulling pages from the recession playbook.

Stocks Say Recession, but Bonds Say Depression - TIME

They're moving into types of stocks and other investments that typically have held up best during past downturns and avoiding those that tend to get hit the worst. The temptation to sell everything and get out of stocks can be costly, though. After every previous recession, stocks have eventually gone on to recover their losses — and then climb higher.

Every downturn is different, but a look at the numbers gives investors a sense of at least what's possible. Here's what they show:. Sign up for a weekly roundup of the latest business news plus a look at the week ahead.

Bonds won’t protect you if stocks crash - MarketWatch

But that happened when investors were questioning whether the financial system would even continue to exist, and it was far from typical.

You have to go back to the Great Depression to find a bigger drop for stocks.

The smaller the company, the more its stock tends to fall during a recession. A similar scenario is playing out now.

Because profits tend to stay steadier for companies that sell everyday items to consumers, so do their stock prices.

Bond Performance During Recessions | Finance - Zacks

That's why investors lump them with healthcare and telecom stocks into a category known as defensive stocks. They still fall during recessions but not as much as the rest of the market. Bonds are a traditional comfort blanket for investors during downturns because they are less volatile than stocks and they generate regular income for investors. During the last recession, bonds helped to limit losses for investors with balanced portfolios, then helped them get back to even long before stock-only investors did.

Investors scarred by the Great Recession have piled into relatively safe stocks in recent years, even while the economy was growing, in search of steadier returns. All that demand means they're trading at higher prices relative to their earnings, and more expensive valuations mean these stocks may not offer as much protection as in past downturns.

U.S. bank stocks and bonds clobbered by recession worry - Business Insider

As for bonds, their low yields mean they're not producing as much income. That in turn means they can't possibly provide as strong a cushion as in past recessions.

Gold, meanwhile, is up this year but has been on a general downward trend since summer Gold tends to do best when worries about inflation are growing. Many central banks around the world now see the opposite — a sustained cycle of falling prices, or deflation — as the bigger threat. It's scary to watch the stock market plummet, but long-term investors have always eventually been made whole.

That meant a wait of about five years. Plus, much of stocks' long-term returns can come from just a handful of really big days, and it's impossible to predict when they'll occur.

Miss them and owning stocks gets much less lucrative. If you can live with the higher volatility, you should be in a position to earn higher returns.

I fully expect that stocks ultimately will reach new highs. Obama's budget plan would allow greater scrutiny of high drug prices.

Stock traders work at the New York Stock Exchange. The temptation to get out of stocks during a recession can be costly.

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