Speaking in a video on the firm’s website, Woodford says that while it is impossible to tell exactly how long the current market sell off will last, he believes the market is now “substantially through the acute phase” of the fall.
“We are in the teeth of a pretty severe sell off, but I think it is important to differentiate between what we are seeing now and what we saw in the wake of the collapse of Lehman’s and the banking crisis of 2008. Then, there were major concerns, and rightly so, about the banking system, its ability to support the economy and whether or not branches would be able to open. The current crisis is not about that at all,” he said.
Instead, Woodford says, the current crisis is rather markets beginning to reassess their views of what the global economy can actually do, amid growing fears of deflation. And, while he admits that there could well be irrational moves taking place within it, the adjustment is not unexpected.
Asked how long it would last, Woodford said it was impossible to answer, but he added that his sense was that we are now substantially through the acute phase of the selloff.
“I think there is a bit more to go but we have endured a pretty severe sell off already. So, I wouldn’t expect this correction to go on for weeks and months. I think it will be over and done with relatively quickly.”
But, he is quick to add, that does not mean that things are going to get easier.
“On a three to five year view, the world economy faces a challenging future,” he added.
