The long term view

March 13, 2020

The last few weeks have seen the fastest ever decline in global equities. The collapse has also been the most severe since 2008’s GFC.  

Among the many catalysts, the potential economic impact of the coronavirus and an oil price crash stand out.  

With equity markets close to all-time highs in the run-up, a correction was arguably due.  

The current uncertainty has not only manifested in price declines, but also in higher volatility. The most used volatility measure, the VIX, is known as ‘the fear index’ for a reason.

However volatility is not always bad news. Indeed, for managers like Talaria it offers considerable opportunities.

  • If you’re looking for bargains, parts of the equity market are offering you the best there has been for the last 30 years.  The only comparable period was the peak of the tech boom in March 2000.
  • On the flip side, growth equities such as those in the technology sector are at their most expensive.
  • As a consequence, the spread between the most and least expensive shares, ‘the value gap’, is at its greatest ever.
  • Talaria’s investment process is the same as it has been for 15 years. It allows us to benefit at times of market stress. The increased volatility and value gap work to our advantage.
  • No one knows what will happen in markets over the next 6 months.  However, at Talaria we can feel confident about our investment returns over the next 5 years.  

For more information contact the team at:

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