UPDATED (13-August-2020): Well. What a difference a few months can make...
I thought it might be helpful to revisit the below post (from back in March during the darkest depths of the global market crash), in terms of understanding how the risk/return outlook is evolving. In many respects we have come a long way, and certainly, sentiment has changed a lot since the extreme uncertainty, panic, and pessimism that prevailed back then. But what, if anything has changed with regards to the outlook?
- Global Equity Market Breadth: the first chart shows the proportion of countries we track (70) whose main equity benchmark is positive on a year over year basis. After collapsing to almost zero in mid-March (bonus points to whoever can guess the 1 country that didn't go negative), this indicator has rebounded to 40% at the time of writing. This pattern of collapse and rebound is a textbook medium-term bullish signal, which has worked more often than not. But we remain below a majority, and until that blue line is cleared, there is a real possibility of another leg down: with 2001/02 the key cautionary instance of a partial recovery in market breadth.
Global Equities Breadth (Image not shown due to low ratings)
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