Cambridge Partners Knowledge Hub:

Market Falls and Recovery

Updated 1 May 2020

We are living in extraordinary times.

Since New Zealand moved to Alert Level 4, we have been operating remotely but are continuing to monitor and review your investments.  Whilst these are challenging times, we remain here for you and are available for meetings via phone, email, FaceTime/Zoom, inside and outside normal business hours.

Fiscal support packages are being released at great pace.  New Zealand has a package initially costed at $12.1 billion or approximately 4.1% of New Zealand’s GDP and the USA a package estimated to possibly total US$2 trillion or approximately 10% of USA’s GDP.

Share markets have continued to exhibit volatility with portfolio values down significantly since the start of the year, although values have stabilised this week following the announcement of fiscal stimulus packages and the far-reaching measures of the government to stop the spread of the virus.

We have analysed daily return data from the S&P 500 Index (a measure of the value of the 500 largest companies listed on US stock exchanges) to look for share market falls and subsequent recoveries.

It has been a very eventful 90 years. During this period there have been 15 significant market falls, and after each fall there has been a significant recovery.

Whilst we cannot predict the future, evidence shows that at some point markets will recover. The only way for you to be sure you participate fully in the recovery is to remain patient and stay invested.

We hope you find this information helpful and it puts the recent market declines in context.  Please feel free to contact us and we will be happy to help.

From all of us at Cambridge Partners, take care and stay safe.

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