Recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). The following are how to react when recession is approaching.

Build up your emergency fund:

 Put aside a 6-month rainy-day fund.

Do not sell your stocks just because your investments are at a loss:

If you believe in your stocks, do not give up on them so easily.

Stay rational and do not panic:

 Try to make the best decision from a logical place.

Load up on some awesome companies:

Now is your chance to create a new watch list of terrific companies that you think will enrich your current collection of stocks.

Look for companies that have bounced back:

 If businesses were able to recover after the 2008 recession, they ought to be resilient enough for the current climate, too.