In a recent Advisor Perspectives article, a guest contributor offered a synopsis of a chapter from finance professor Jeremy Siegel’s 1994 book, Stocks for the Long Run—one that the author describes as “surely one of the best books on investing of all time.”

The article explains that the chapter (number 15, entitled “Stocks and the Business Cycle”) “makes so much sense, yet it’s rarely discussed in the financial literature. It’s as if Siegel discovered a gold mine and nobody else was interested.”

The article features data from the book showing how the stock market tends to turn down before a recession hits and rises before it is over. “Of the 47 U.S. recessions since 1802,” it explains, “43 (9 out of 10) have been preceded by stock market declines of 8% or more.” But the author also warns of false signals, noting: “Market declines that are not followed by a recession (false signals) are notably shorter in duration and less severe than declines that presage recessions. This is an easy hurdle to clear. When the market is in decline, but the economic indicators are healthy, investors should stay invested and take the short-term pain that the market is dishing out.”

According the Siegel, the article says, and investor who “plays defense” can earn as much as 5% per year in returns, compared to one who simply holds steady throughout recessionary periods. He offers a quote from Siegel’s book:

“My studies show that if investors could predict in advance when recessions will begin and end, they could enjoy superior returns to the returns earned by a buy and hold investor.”