Investing in global stocks is, undoubtedly, a winning strategy, particularly since the global financial crisis and against a backdrop of low and lower interest rates. The Covid-19 pandemic may have ended the longest US bull market in history, but stock prices rebounded very quickly and strongly. Notably, each correction has been relatively shallow and short — following which stock prices have inevitably gone on to record higher highs (see Chart).

The key driver underpinning this remarkable rally is liquidity. Major central banks have been aggressive in expanding their balance sheets for more than a decade through quantitative easing and injecting massive liquidity into the global financial system. Governments, too, have given out generous stimulus/relief monies to the people in response to the pandemic — resulting in trillions worth of excess savings worldwide.

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