Neil Veitch: Sell-off was overdone

Although it was only 12 months ago, it is worth recalling the depths of the gloom that enveloped equity markets during the first few months of 2009.

Fears of a global depression were widespread and some, admittedly more hysterical, observers were foretelling the death of capitalism. The phrase ‘quantitative easing’ was still alien to most casual observers. In this environment, stocks were sold indiscriminately and many reached record lows. In particular, as risk aversion increased, small and mid-cap stocks saw sharper declines than their large-cap peers. While being aware of the gravity of the economic situation, at the time the equity market sell-off felt overdone. A number of companies were trading at remarkably low valuations, ...