What Happens Next?
Analysts, commentators, and managers are all taking turns making predictions about where financial markets will bottom. While modern markets have never faced a global health pandemic with the magnitude of COVID-19, history is filled with examples of unexpected headlines and “Black Swan” events that take analysts and investors by surprise. In fact, that’s how most Bear markets begin. In volatility-charged markets such as these, it helps to take a step back and survey the bigger picture.
No one likes Bear markets. They are chaotic, volatile, and emotionally exhausting. Bear markets are also inevitable and a key part of financial market cycles. In 2016 we authored a short piece called the Bear Market Road Map that highlights several characteristics of Bear markets that make them unique to any other market climate. While Bear markets should be respected, they need not be feared. Addressing these attributes is a crucial ingredient in our risk management process, and how our funds are designed to diversify, hedge, and even profit from the inevitable Bear market.
Whether the Bear market bottom is just around the corner or months away, here is what you can expect next.