Page 10 - ISQ UK Aprl 2020

“ We believe the current volatility presents a

tremendous opportunity for long-term investors. ”

We believe the current volatility presents a tremendous Recessionary Bear Markets
opportunity for long term investors. The market will react to the
spread of the virus in the coming days and weeks, and for this BEAR MONTHS TO
RETURN
MARKET
MARKET
TOTAL
TO HIGH
reason we remain guarded in the short term with the number of MARKET BOTTOM MONTHS DECLINE FROM BOTTOM
TOP
new cases still accelerating in the US. Determining when and at Jul-57 Oct-57 3 -20% 12
what price level stocks will bottom is guesswork at this point.
Instead of focusing on ‘picking a bottom,’ developing a strategy to Jan-60 Oct-60 10 -18% 6
execute on the inevitable recovery is a better choice. With stocks Dec-68 May-70 17 -36% 31
down sharply, those with diversified portfolios and a long-term Jan-73 Oct-74 22 -48% 75
outlook can buy partial positions with some available capital
now. Feb-80 Apr-80 2 -21% 4
Feb-81 Aug-82 6 -24% 3
We suggest reserving some buying power. Even if the news is
challenging and equities experience additional weakness, stocks Jul-90 Oct-90 3 -21% 4
will eventually find a bottom. As the market shifts from decline to Mar-00 Oct-02 27 -49% 60
advance, allocate additional capital. As previous bull market Oct-07 Mar-09 17 -59% 50
recoveries reveal, buying at the absolute bottom is not necessary
to generate sizeable returns. Bear market declines are often rapid, Average 11.9 -33% 27
whereas bull markets typically last for much longer periods of Median 10.0 -24% 12
time. Since 1958, the average bull market lasted approximately 41
months and advanced by 155%, whereas the average bear market Source: Raymond James Equity Portfolio & Technical Strategy
retreated 33% over a mere 12 months during that same period.

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