New research conducted by Kenneth Rogoff of Harvard University and Carmen Reinhart of the University of Maryland looks at the aftermath of past financial meltdowns.
The analysis is based on 14 severe banking busts from the Depression, to the crises of Spain in the late 1970s, Norway in 1987, and Finland, Japan, and Sweden in the early 1990s. The sample also includes seven emerging-market crises.
The paper confirms earlier findings – downturns that follow a financial crisis are typically long and deep. From peak to trough equity prices declined an average of 56%, with bear markets lasting an average of 3.4 years and housing prices declining 36% in 5 years. I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes. To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
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