The central banks eased many times and eventually there was a sudden reversal from pessimism to optimism. As result, stock prices rebounded and the willingness to buy risky assets at a favorable price returned. It is important to place the current market issues in context. There has already been a major bear market in stocks worldwide. Stock valuations have already declined sharply.
Many portfolios hold above-average levels of cash reserves.
Short positions are high. Technicians have identified some but not all of the classic extremes traditionally associated with market bottoms. Our view is that the future economic recovery following this recession will be strong rather than weak. The key uncertainty is when the markets will shift from discounting economic weakness today to discounting economic strength in the future. The inability to pinpoint that timing reinforces once more the benefits of diversification among different asset classes, combined with a long term investment perspective.