J.P. Morgan examines the rise of “Armageddonists” after the Global Financial Crisis and the cost to investors who acted on persistent bearish forecasts. The piece argues that reacting to apocalyptic narratives has historically led to meaningful opportunity loss, even as recession fears remained elevated and widely believed.
The Armageddonists, Revisited
J.P. Morgan Asset Management
Michael Cembalest
Research
8 Pages
Key Takeaways
Opportunity Cost Matters: Shifting $1 from equities to bonds after bearish calls since 2010 led to underperformance of roughly 40% versus staying invested.
Earnings Drive Returns: About 75%-95% of the S&P 500’s 175% gain since 2010 came from earnings growth, not valuation expansion.
Recession Severity Required: A future bear market decline of 35%-45% would be needed to offset prior missed equity gains from defensive positioning.
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