The “Nino effect” is a term coined by Harvard Business School Professor John Cochrane in the 1970s that suggests a slowdown in economic growth is not necessarily bad for the economy.
Cochrane’s research showed that when there is a slowdown, it doesn’t necessarily mean there will be a downturn.
If we look at the chart below, he said that the Nino effect was the opposite of the slowdown that has been happening since the early 1980s.
The chart above is a chart from a paper Cochrane published in the Journal of the American Statistical Association in 1996.
It showed that the stock market began to fall during the 1980s and 1990s.
Cochrane wrote in the paper: If we look back, it is clear that the ‘Ninos’ occurred in the mid-1980s and early 1990s, when the stock markets began to drop in value.
We also see that during the Ninos, there was a rapid decline in growth and job creation, and that this was followed by an even more rapid decline after the recession ended.
What does this mean for investors?
According to Cochrane, if you are buying stocks now, then it will likely be a better investment than it was in the past.
That is because, as he wrote in his paper, we are now able to invest in the future and know that the stocks will perform in the coming year.
He said that investors should buy stocks in the near term and wait for the market to stabilize and the stock prices to improve.
If stocks don’t do well in the next 12 months, then that is when investors should stop buying.
What to do if the market falls?
The first thing you need to do is to sell your shares if you do not think the market is in the best of shape right now.
When you buy stock, you can invest in your portfolio to ensure that it does not collapse, and you should also wait for any market corrections to occur.
To sell your stock, just click on the red X and click on “sell” in the dropdown menu.
For more on how to do this, read this.
If you need more help, check out the chart above.
In this case, Cochrane suggests that investors would be wise to wait for a recovery in the stock economy, and to buy into the stock that is growing.
As for the Nines, Cochran said it will be difficult to predict exactly when the market will fall.
“This is why the markets are so volatile and that’s why we have to take the time to understand the situation and take the appropriate actions,” he said.
Read more about stock market trends here.