Many analysts are going out on a limb and declaring that the worst recession since the 1930s has ended.  Not all forecasters are in agreement on whether the recession has actually ended, but many economic indicators are pointing to the possibility that the worst economic crisis in most people’s lifetime has finally come to an end.

Nobel Prize-winning economist Paul Krugman made the following statement during an interview:

“It’s quite possible that retrospectively, we’ll say that the recession ended in July or August.”

Sung Won Sohn, professor of economics at California State University has this to say:

“The worst recession since the Great Depression is likely coming to an end.”

If these gentlemen, as well as many other economists, strategists and analysts are correct, the odds are in your favor that you can profit handsomely from your stock investments in the next year. 

Certainly the stock market as a leading indicator has already gone up considerably. The Dow Jones Industrial Average has already gained more than 40% since the March lows and the S&P 500 is approaching the 50% gain mark.  So you may be wondering if you have already missed the opportunity to get in on the recent rally or if you can still benefit from future growth.

But if history repeats itself, as it usually does, you are still in luck.  In the last 10 recessions the S&P 500 has gained on average 9% six months after the end of a recession and 14% one year after the recession was officially dead. 

Here is exactly how the S&P 500 has performed one year after the end of the last 10 recessions: 

Recession End                          S&P Performance

Oct 31, 1949                           21.2%

May 28, 1954                          29.9%

Apr 30, 1958                           32.7%

Feb 28, 1961                           10.7%

Nov 30, 1970                          7.1%

Mar 31, 1975                           23.4%

July 31, 1980                           7.6%

Nov 30, 1982                          20.2%

Mar 28, 1991                           8.7%

Nov 30, 2001                          -18.0%

As you can see, the only time in the last 10 recessions when the S&P 500 turned negative a year later was in 2001, and that was due to the 9-11 terrorist attacks.

If you are looking to take advantage of the recovery, but you have missed the opportunity to profit from the recent 40% plus stock rally, you still have a chance to benefit from the likely scenario that a year from now stocks will be significantly higher than they are today.  Unless of course most economists and analysts are dead wrong about the imminent end of the recession. Or, heaven forbid, something unpredictable like a major disaster occurs within the next several months.