Stocks have pared losses recently, but this doesn’t mean markets are on the road to recovery
When stock markets crash they do so because something big and unexpected has happened. No two crashes are like each other, that is what makes it so difficult to predict a stock market crash.
But recoveries from stock market crashes tend to follow a pattern. Which is handy because getting the recovery right is the only way we are going to rebuild our savings to where they were. If your savings are positioned right as stock markets recover, you’ll do well.
But first, has the crash ended or is there more to come?
Well, the coronavirus crash started on 19 February. Over a month the US market fell 35pc, and the UK market dropped 33pc. Since then they have recovered to be down 19pc and 25pc respectively. That’s quite a rebound, so the recovery must have started in earnest.
Not so fast. First, let’s see what happened in other crashes.
The ‘Black October ‘ crash of 1987 was quick – it lasted three months and investors lost a third of their money. The Global Financial Crisis of 2008 lasted 16 months and saw markets drop 49pc, and the dot-com crash of 2000 lasted 33 months for a loss of 45pc.