New episode, same story

At first glance, the recent market volatility seems to us unique, but a look at previous market drawdowns illustrates some of the same patterns.

Over five previous historical market drawdowns (as represented by the Dow Jones Industrial Average®), we see a similar trajectory over the 30-day period after local peak. To put this into perspective, the drawdown compared to 1929, considering the current market environment, has not reached that low.

Drawdown speed similiar to 1929 or 2008

Drawdown speed similiar to 1929 or 2008

Data sources: Macrobond, Macquarie. Data from May 26, 1896 to March 20, 2020.

Past performance is not indicative of future results.

Charts shown throughout are for illustrative purposes only and not meant to predict actual results.

Chart is for illustrative purposes and is not representative of the performance of any specific investment.

What this means for investors

Despite the unpredictability of the markets, there is some comfort in historical perspective, in our view. Previous trends in past drawdowns confirm that the market has experienced this before, and while it may be the first in more than a decade, we find it’s telling a similar story – eventually, after some time, the markets did eventually recover from the largest drawdowns in history.


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IMPORTANT RISK CONSIDERATIONS

Investing involves risk, including the possible loss of principal.

Past performance does not guarantee future results.

The views expressed represent the investment team’s assessment of the market environment as of April 2020 and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice. Views are subject to change without notice and may not reflect the Manager's views.

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A benchmark is a standard against which the performance of a security, mutual fund, or manager can be measured. It is usually an index of securities representing a particular market or a portion of it.

The Dow Jones Industrial Average is an often-quoted market indicator that comprises 30 widely held US blue-chip stocks.

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