Recently, both Howard Marks in his latest memo and Cullen Roche on his Pragmatic Capitalist blog have touched on the question of how fast we are going to leave this crisis behind? Cullen makes the crucial distinction between a shock and a crisis. In a shock, some external event derails the market for a while, but it doesn’t cause a sustained decline in economic activity or a long-lasting recession. Instead, markets and the economy get back on their feet quickly, once the shock has been digested. Meanwhile, the typical cyclical downturn is slower to unfold and often the result of a previous boom like the tech boom in the 1990s or the housing boom in the 2000s.
Shock or crisis?
Shock or crisis?
Shock or crisis?
Recently, both Howard Marks in his latest memo and Cullen Roche on his Pragmatic Capitalist blog have touched on the question of how fast we are going to leave this crisis behind? Cullen makes the crucial distinction between a shock and a crisis. In a shock, some external event derails the market for a while, but it doesn’t cause a sustained decline in economic activity or a long-lasting recession. Instead, markets and the economy get back on their feet quickly, once the shock has been digested. Meanwhile, the typical cyclical downturn is slower to unfold and often the result of a previous boom like the tech boom in the 1990s or the housing boom in the 2000s.