Reassessing our return expectations
Equity market developments since the beginning of April have been confounding. On the one hand, most of the worst predictions for the global economy have been confirmed, and most countries are in the midst of the worst economic contraction in a century. On the other hand, markets have recovered back to recent highs that were achieved at a time when the outlook was relatively robust, few had heard of Covid-19, and valuations were arguably somewhat high. What accounts for this dissonance?