Different crisis, similar recovery
Investing is always about the future, but we can learn a lot from the past. Last month marked one year since global equities bottomed, and we are now entering the second year of the economic and financial market recovery. History suggests that the second year of a recovery is promising for equity investors. In the 11 prior bear market lows (such as what we experienced in March 2020), equity markets advanced an average of 13% during the second year of the recovery. What may surprise investors is that prior to the strong finish, U.S. equity markets typically experienced a drawdown during the second year, creating volatility that can feel at odds with the strength of economic data. Despite the surprise volatility, our view is that the U.S. will likely be the best region for risk investors in the short term. Please review our Outlook for a summary of recent market events, as well as our thoughts on the potential for an intra-year drawdown, catalysts for U.S. and global equities, and what concerns us over the longer term.