Distinguishing a recession from a financial crisis
Australia's early-1990s recession produced far heavier bank credit losses than the GFC. On RBA estimates using a consistent long-run dataset, losses for a sample of large Australian banks totalled roughly 8.5% of average lending over 1989-1994, versus about 2.5% over 2007-2012. The gap reflected balance-sheet structure, lending standards and the preceding credit boom — not just how deep the downturn was.
What it means for your portfolio
Don't only ask which part of the business cycle your assets sit in — ask what has to keep working for them to hold their value. Hidden dependencies on credit quality, funding, interest rates or leverage can matter more than the label on the asset.
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Starting valuation matters
Higher starting valuations have historically been associated with lower long-run returns.
The market is not the economy
Stock markets and GDP frequently diverge over multi-year stretches.
Rate regimes reshape leadership
Falling rates have historically flattered long-duration and growth assets; rising rates have pressured them.
General information only, not financial advice. Historical figures are approximate and provided for education.