It has been noted that the underperformance of the Russel 200 has been primarily a function of the greater weightage of small cap index for the finance and energy sectors in relation to the S&P 500. While the stocks in a few of the defensive sectors had fared a bit better than the broad indexes, overall it has been a tough phase for the investors of stock market.
As the S&P 500 index has been losing out historically close to one third of their value as a response to recessions, it has been a reasonable expectation that most of the pull back is in the past.
This downturn had started in the United States not due to the problem in the structure of the economy of United States however it was due to the outbreak of the coronavirus which was an exogenous shock. There are experts who believe that the market will be able to get back to their footing just after it gains a better confidence and the visibility has been the underlying driver which means the outbreak.
There is no quick fix when it comes to the virus, there is at least a reasonable expectation of close to six weeks for the market to go beyond the current levels feel the expert as the headlines which suggest the economic and human toll of the outbreak will be digested by that time.
Having said that, the experts are of the opinion that the bulk selling-off is in the past and the best strategy for investment is the ones who hold the longer holdings beyond the next couple of years or even more years.