Global bull market after 11 years ended. US stocks index Dow Jones Industrial Average recorded yesterday a decline from the previous all-time high on 12 February of 20.3 %. Bear markets condition has been thus fulfilled, i.e. decline from the previous peak of more than 20 %.
What further development do I expect? Global coronavirus epidemic will have certainly a tremendous negative impact on the global GDP dynamics and corporate earnings dynamics. This is for sure a negative factor for global equities. However I believe on the other hand that after the bigger than 20 % decline from the market top global stock markets have got on relatively attractive valuation levels which could slowly entice investors back to buying. On the other hand the very high volatility will certainly stay with us for some time. Small retail investors have to get used to it. The key is not to panic, keep your nerves and emotions at bay and not to start selling under emotional stress just when the level of market fear is the highest. On the contrary. Long-term successful investors have an attribute that they are able to spot investment opportunities in a moment when fear on the market is on the highest level, i.e. such as during these turbulent days.
Michal Stupavský
Investment Strategist Conseq Investment Management, a.s.