Acting rationally: Why equity markets have recovered

Unearthing the reason for market heights

clock • 3 min read

Since the remarkable equity market reversal in developed countries in late March, many clients have asked whether markets have become irrational.

Given the extreme uncertainty surrounding Covid-19, record unemployment, and eye-watering declines in second-quarter GDP, how can the markets have flirted with all-time highs? Possible answers range from "There's no alternative" to young investors' driving the market through new digital investor platforms. Our investment strategy group, however, thinks that the answer is fundamental. And we do not believe that US equity markets are acting irrationally. US Fed review to 'add fuel to equities' fire' Mathematics and value judgments At their core, financial markets reflect assessm...

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