Ann: EML to acquire PFS on renegotiated terms, page-40

A lesson from history

I was looking at a graph of the ASX 200 this morning during the share market crash that accompanied the GFC over a decade ago. It is a graph filled with false starts, fake recoveries and ‘bounces’ that went nowhere.

For example, in November 2007, the ASX 200 peaked at around 6,700 points before falling off a cliff to around 5,260 points by March 2008. From there, the index rallied all the way up to 5,930 points in May, before plunging down over the next few months to finally find its bottom of 3,145 points in March 2009.

However, I’m not inferring that this pattern is likely to be repeated in 2020. I have no idea what the markets will do this afternoon, tomorrow or next year.

But I do know that ‘V-shaped’ crashes are rare, especially if there are external factors at play (such as the GFC or the coronavirus). And if we truly have already found ‘the bottom’ of this 2020 crash, it will be the shortest, sharpest bear market in recent history. This is possible, of course, but in my humble opinion, unlikely.