Clearly, if you just remained invested, there was a quick recovery from the market impact, and the bull market resumed.
While the chart is not intentionally deceiving, it hides a very important fact about the market decline and the potential impact of the SARS virus.
Real personal consumption expenditures and consumer confidence had also reverted during the recession in 2001-2002, so there was sufficient "Pent-up" demand to offset the economic and market impact from the SARS outbreak.
Though stock markets recovered their stride following Monday's rout, the risks of a deeper market correction remains.
The problem with a more significant market correction, spawned by a repricing of valuations due to slower economic growth, is that it creates a downward spiral.
"A big market correction would severely impact global growth this year, the International Monetary Fund and ratings agencies have warned. The hit to U.S. consumers alone would likely dampen spending and could halve GDP growth, bringing U.S. growth to levels last seen during the financial crisis a decade ago. And companies already burdened with a record level of high-yield debt would be even more exposed after a market downturn, creating the possibility of a wave of defaults that could further undermine confidence." - Johnson & Palmer via Foreign Policy.
With the economic expansion peaking, the market overly extended and excessively bullish, and fundamentals strained, there is a vast difference between "Now" and "Then." It also just might be the message that plunging commodity prices and falling bond yields are already sending.
https://realinvestmentadvice.com/sars-versus-wuhan-the-difference-between-now-then/
While the chart is not intentionally deceiving, it hides a very important fact about the market decline and the potential impact of the SARS virus.
Real personal consumption expenditures and consumer confidence had also reverted during the recession in 2001-2002, so there was sufficient "Pent-up" demand to offset the economic and market impact from the SARS outbreak.
Though stock markets recovered their stride following Monday's rout, the risks of a deeper market correction remains.
The problem with a more significant market correction, spawned by a repricing of valuations due to slower economic growth, is that it creates a downward spiral.
"A big market correction would severely impact global growth this year, the International Monetary Fund and ratings agencies have warned. The hit to U.S. consumers alone would likely dampen spending and could halve GDP growth, bringing U.S. growth to levels last seen during the financial crisis a decade ago. And companies already burdened with a record level of high-yield debt would be even more exposed after a market downturn, creating the possibility of a wave of defaults that could further undermine confidence." - Johnson & Palmer via Foreign Policy.
With the economic expansion peaking, the market overly extended and excessively bullish, and fundamentals strained, there is a vast difference between "Now" and "Then." It also just might be the message that plunging commodity prices and falling bond yields are already sending.
https://realinvestmentadvice.com/sars-versus-wuhan-the-difference-between-now-then/
No comments:
Post a Comment