The spectacular upside of domestic and international equity markets, since the depths of the bear market in March, has been one for the record books. You have likely heard us say that repeatedly over the past few months and we’re likely to continue focusing on this phenomenon through the end of the year. Despite the positive shock factor that has been evident, however, such gains should not be dismissed as entirely unexpected. The analysis and commentary that we have released since March has been supportive of gains following event-driven equity market stress cycles.
The self-induced economic downside from COVID-19 falls directly in-line with what we constitute as event-driven. It was not a normal cyclical event, nor was it a structural event caused by dire economic conditions (i.e. think of the 2008 debt-fueled financial crisis). Our video commentary released on April 28th, which addressed the three types of bear markets, focused on the notion that COVID-19 produced an event-driven bear market capable of generating a faster snapback than other types of bear markets. Click here to re-watch Three Types of Bear Markets.
Moreover, broad historical returns following notable equity market volatility (despite the cause of said volatility) are also highly supportive of what we’re seeing currently across global equity markets. As we look ahead, we remain supportive of equity market participation for those investors with at least a 3-year time horizon. The chance to remain, or even become, a proactive bear market investor is still present.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may no be invested into directly.