Recent conversations with our clients have provided a stark reminder of just how far markets have come since the COVID crisis began to have an impact.

As markets sank to their lowest point last March, many of our clients’ attempts to make sense of that situation often involved referring back to previous market crashes such as the GFC, Black Monday and the Wall Street Crash and relating how markets subsequently recovered from those crises to how they might recover from COVID. This analysis resulted in an alphabet soup of possible outcomes, with potential recovery scenarios being described as V-shaped, U-shaped, W-shaped or the most pessimistic of all, L-shaped.

A year later, we are finding that the most pressing issue our clients seem to be grappling with at the moment is whether markets have entered bubble territory and if they have, whether that bubble is likely to burst any time soon. Market history is once again being used as a reference in trying to make sense of it all by comparing and contrasting today’s market with previous bubbles such as the US housing related bubble, the Dotcom bubble or the Roaring Twenties. Some of our more bearish clients are pointing to notable canaries in the coalmine in the form of the inexorable rise in Bitcoin and Tesla or the emergence of suspicious financing vehicles such as Special Purpose Acquisition Companies (SPACs), while our more bullish clients believe excess liquidity means all boats will continue to rise for quite some time.

The speed at which we have gone from bust to boom in the last eleven months has been an incredible roller coaster ride. For us, it has also proved to have been a great refresher on the history of markets.