""It has been 408 days since the last 10% correction in the MSCI World index, the 8th-longest period on record," writes Andrew Lapthorne, global head of quantitative strategy at Société Générale, in a note to clients today.
"However, simply not having a correction for a long time does not necessarily imply impending doom for equities; we find no relationship between time since correction and future returns. Nonetheless, we still worry how, in these times of interconnected asset markets and mark-to-market risk modelling, such extended runs can hide the real volatility in equity investing. In brief, it can lead to excessive risk-taking."
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