Eureka Report: Never Catch a Falling Knife

“If you can keep your head when all about you are losing theirs…” — IF-Rudyard Kipling

March 25th marks the 24th anniversary of the Invesco Oppenheimer International Growth Fund, a Wall Street pioneer in introducing U.S investors to markets beyond the comfort zone of their home soil.

It has been managed since inception by George Evans, who continues to oversee its investment strategy while working at his other day job, Chief Investment Officer of Global Equities for money management behemoth Invesco (AUM of $1.2 trillion).
Since he started with the company in 1990, Evans has endured and survived such events as the 1993 World Trade Centre bombing, 9/11 (both literally), the GFC, a couple of Iraq wars, Russian defaults and the collapse of the tech bubble.

Perhaps it is unsurprising that he is quite sanguine about the outlook for global markets despite the onset of the coronavirus pandemic which he says “was underestimated by everyone.”

“From my experience, there will be a lot of outstanding companies trading at valuations that will present great opportunities for long term growth investors.”

Evans expects the current market roller coaster ride to continue in the immediate term.
“We can expect extreme volatility until the overall picture becomes clearer and we are over the hump as the virus takes its course.
“The key will be to monitor daily new losses on the pandemic front, progress on and the size of fiscal stimulus and its effect on the economy and the earnings outlook.”

Evans welcomes the decision to double the initial $1 trillion fiscal package foreshadowed before the last weekend.
“As Larry Kudlow (National Economic Council Director) indicated it was clearly not going to be enough.”
He is cognisant of estimates of a GDP decline of 6 per cent in Q2 and has a sense that it is a figure that could be revised downwards.

“We could have a horrible quarter or two. It will be a question of when the recovery comes and how quickly we will see the rebound.”

The oft-quoted bear market cliche from the old Scottish saying “never catch a falling knife” is already doing the rounds.
Evans agrees that it is too early to begin to predict the bottom of the current market downturn.
“It is imperative to keep an eye on developments and be fluid".
“There can be an overly defensive tendency to retain cash and as we have seen in the presumption of previous bull markets, the upside will be heavily front loaded when it rebounds.
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“There will be perma bears out there predicting the end of the world.”
Evans says that the global community underestimated the onset of the coronavirus and its immediate impact on markets and economies.

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