V-shaped? U-shaped? W-shaped? You’ll hear a lot of letters from pundits predicting what the market recovery will ultimately look like. Vice President Charlie Toole discussed his measured stance on market prognostication in our recent quarterly webinar*: Separating Pandemic Noise From Investment Signals.
Please enjoy the excerpt below and click here for the full webinar replay to hear more.
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Charlie Toole: All bear marketsA period in which stock prices decline significantly from recent highs and remain below previous high marks for weeks or months. Generally, a decline of at least 20% in stock prices is considered the threshold marking the start of a bear market. come to an end. But predicting when we recover and what that recovery will look like is a fool’s errand. Like you, I’ve seen a lot of predictions on the type of recovery that we’ll have. Is it going to be a U-shape, a W-shape, a V-shape? It’s an alphabet soup of letters. I’ve even seen a prediction for an L-shaped recovery, which is really no recovery at all.
But I expect this recovery will be like other recoveries that we’ve had in the past. A version of two steps forward, one step back. Many think that we had a V-shaped recovery after the Great Recession in 2008–2009, but it wasn’t. Yes, we had a quick rise from the bottom in March of 2009 but we didn’t fully recover until early 2013 and there were many drops in the stockA financial instrument giving the holder a proportion of the ownership and earnings of a company. market along the way. Many forget that we had greater-than-10% drops in 2010 and 2011, and that made the recovery a bumpy one. Like all recoveries, this one will be uneven.
*Webinar recorded after the market closed on Wednesday, April 22, 2020.
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