K-Shaped Recovery

CatalystInvestment, Lifestyle, Planning

The recovery of a stock market following a market crash is generally described using a letter of the alphabet. A V-shaped recovery refers to a short, sharp market recovery back to pre-crash levels, while a U-shaped recovery is used where markets remain subdued for a period of time before a recovery. A W-shaped recovery occurs where a V-shaped recovery is quickly followed by a second market crash, often due to a realisation that perhaps things aren’t as rosy as thought post the crash. The dreaded L-shaped recovery is where there is no recovery – markets drift sideways following the initial market fall!

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