The market and the economy in 2009

Not since the 1930s had pessimism been so deeply rooted as it was at the outset of 2009. Over the course of little more than seven months, US stocks (S&P 500) had dropped by almost 37 per cent and bond buyers were demanding sky-high risk premiums: globally, high yield bonds recorded spreads of up to 2,000 basis points.

In Norway, the stock market response was even more profound: the Oslo Børs Benchmark Index fell by more than half and the pessimism continued into the new year. By 3 March, the Benchmark Index had fallen by a further 12 per cent.

But then the situation reversed. And when the upturn finally arrived, it came in spades – not least in Norway. Having bottomed out, the Benchmark Index soared by over 88 per cent by the end of the year. We would be hard put to find a better illustration of the importance of patience and a long-term stance in the equities market.