After the fall in the market from February 2020 to March 2020, the most accurate question to ask is this:
After recovering so much for the March 2020 lows, what is the prior precedent for the market? As we said in our recent review of Atul Auto Limited:
“markets are driven by precedent and the price action that we’re currently seeing is not the first time that the stock price has suffered such a decline.”
The market is always on the hunt to drive investors mad and the best way to accomplish this is by snatching defeat from the jaws of victory.
To the question above, we have lined up the years of 1937-1939 as our first qualifying entry (there are more). In this two year period, the market experienced two bear markets (-20% or more) and two market corrections (-10% or more).
Make note of the fact that if this happened to the Dow Jones Industrial Average then it is likely that we could find the same with any market that existed at the same time, for obvious reasons.
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Atul Auto Limited October 3, 2020