With momentum back, history supposedly shows the gains are here to stay, but past recessions were caused by fiscal and monetary problems — not a global pandemicThe Wall Street bull is seen in the financial district in New York. Picture: REUTERS
Of course, they could prove true. But with memories of March so fresh, a dose of scepticism is in order. Countless bearish calls informed by past experiences from Wall Street titans look way off today. Similar caveats logically apply to the current crop. Keith Lerner, chief market strategist at SunTrust Private Wealth Management, analysed what happened following the benchmark’s best 10 quarters in the past 70 years and found that the S&P 500 rose in the next one every time, with an average gain of 8%. A year later, the index was higher nine out of 10 times. He acknowledges it’s one data point, but one that’s nevertheless useful in building a view on markets.
Jim Paulsen, chief investment strategist at the Minneapolis-based firm, knows nothing is foolproof. Back in April, he wrote a report titled, “Can Investors Rely On Any Indicators?”, questioning the usefulness of classic technical and fundamental signals in a scenario as unique as this. While that question remains, he still considers some to be helpful when viewed holistically.
“This isn’t the normal ball field,” said Abbasi. “We’re playing in a lopsided, crazy looking environment where you never know if things will be flipped on their head.”
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