Hi all, I saw this statement in a past ST9 paper and I would like to verify it if possible to use it in my stress testing of a portfolio with guarantees. The specimen 2010 paper solution to question 5 (i) reads;- "In rough terms share prices generally collapse by say 30% every 7 years or so before eventually recovering ground." Don't talk about why I ddn't use it in my past April 15 exam...lol
The economic cycle lasts about 8 years in developed countries. The statement otherwise is a gross generalization.
Well the last crash was in 2008 and in 2015 we have just seen a 10%+ decline in markets due to jitters over China - perhaps they are on to something? Maybe we need to wait until 2022 to see if this "pattern" continues!