Rich rewards usually await investors who work up the nerve to buy stocks or stock mutual funds in recessions.

But experience shows that your patience, as well as your nerve, may be tested before this bargain-hunting quest pays off.

A look back at recent economic slumps is timely, now that the U.S. economy is presumed to be at least three months into its first recession defined as two or more consecutive calendar quarters of declining output in a decade.

Economists surveyed by Bloomberg expect government figures on gross domestic product for the third quarter of 2001, which are due out Oct. 31, to show a drop of 0.5 percent after adjustment for inflation. The criteria for recession would be met if that were followed by another minus number in the fourth quarter which rates as a likely prospect in the aftermath of the terrorist massacres Sept. 11.

A recession could be proclaimed even sooner if real GDP for the April-June quarter, which has so far been reported as showing a meager increase, were to be revised to a negative reading as more complete data come in.

Amid all the misery they inflict, recessions are legendary investment opportunities. If you’re looking to buy stocks cheap, the standard reasoning goes, best to act while the news is still full of gloom. “The market is a barometer, and will head up many months before the recession ends,” Jeffrey Hirsch says in the newsletter Stock Trader’s Almanac Investor.

Devilish details

This simple idea, however, is not so easy to put into practice. Looking at five previous recessions in the past 40 years, we see that the pattern of market recovery varies widely from one recession to the next. Immediate gratification is definitely not assured.

Since most individual investors approach stocks as a long-term proposition, I calculated the performance of the Standard & Poor’s 500 Index over five-year periods after the recessions that occurred in 1969-70, 1974-75, 1980, 1981-82 and 1990-91, relying on Commerce Department historical data for quarterly percent changes in inflation-adjusted GDP.

The S & P; 500 produced a positive return in all five cases, on average nearly doubling with a five-year return of 94.8 percent, or 14.3 percent per year. That handily surpasses the typical annual return of 9 percent to 11 percent that shows up in long-term studies of the U.S. stock market through all years good and bad.

Note, though, that the gains ranged from a potent 224 percent from March 1982 through March 1987, to a puny 11 percent from March 1970 through March 1975 (a 2.1 percent annual rate, much less than you could have earned in money-market securities over the same span).

In the 1980s, as events unfolded, the U.S. economy broke out of an extended spell of stagnation combined with high inflation, and surged ahead. After the 1969-70 recession, by contrast, the economy managed only a short recovery before lapsing into decline once again.

When the gun sounds

Besides those imponderables, any investor who tries to follow a post-recession strategy in stocks faces a practical obstacle the official end date of a recession is never pinpointed until months after the fact. As the hoary boardroom adage puts it, nobody rings a bell.

Sometimes, though, you get some help in making an estimate. In early 1991, the successful prosecution of the Gulf War went a long way toward easing fears about a squeeze on oil prices and supplies. By the end of the first quarter that year, one could certainly hazard a guess that recession was near an end.

The campaign in response to the Sept. 11 attacks may lead to signals of the same sort this time. Even in such circumstances, though, prospects for an early return to full-speed-ahead prosperity may remain anything but clear. Remember that the economy was already struggling before the terrorists struck.

Complications like these suggest an explanation why stock investments made in recessions offer a shot at above-average returns. To make them requires an above-average tolerance for risk and doubt.

Chet Currier is a columnist with Bloomberg News.