Bulls, Burst Bubbles And Bear Markets

Gavekal

Louis-Vincent Gave

Research

2 Pages

Gavekal argues bear markets serve a purpose: they break crowded narratives and rotate market leadership. The note challenges the instinct to wait for a central bank pivot just to buy yesterday’s winners, comparing that mindset to chasing Japan’s former leaders after their bubble. It also highlights an awkward fact: commodities and several emerging markets held up better than many would expect.

Date published: December 6, 2022

Source: Gavekal. As of December 6, 2022. For illustrative purposes only.

Key Takeaways

Narratives drive extremes: When one story dominates, valuations can detach from global GDP reality.
Dollar surge mattered: DXY jumped over 20% in six months, yet many emerging assets still outperformed.
Commodities surprised: S&P GSCI total return rose 27% year to date amid tight Fed and weak China.
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