Anyone hoping for a “truly meaningful pullback” in stocks that would give them a chance to find bargains is likely to be disappointed, according to Robert Buckland, Citigroup Inc.’s global strategist.
The CHART OF THE DAY compares the advance in MSCI Inc.’s All Country World Index since March 9, when the benchmark fell to a 14-year low, with rallies from bear-market bottoms set in March 2003, October 1998, September 1990, August 1982 and May 1970. Buckland had a similar chart in a report yesterday.
This year’s rebound is the sharpest of the six. The All Country World, tracking developed and emerging markets, climbed 56 percent through yesterday. Earlier gains during the same time period ranged from 11 percent to 33 percent, as the chart shows.
Stocks may keep rising for some time even though Citigroup economists and strategists have identified several risks to the rally, Buckland wrote. The threats include premature tightening of fiscal and monetary policy, weakness in the global financial system, earnings shortfalls and concern that prices may be too high relative to earnings and other criteria.
History suggests that any decline, should one occur, won’t approach the 20 percent threshold often used for a bear market, the report said. Losses in the first two years after recession- driven setbacks have averaged 7.4 percent since 1970, according to Buckland.
The chart uses the MSCI World Index, limited to developed markets, for the 1970 and 1982 rallies. Bloomberg’s data on the All Country gauge begins in 1988.