If stocks were to take another leg down, just how low could they go?
To answer a question like that, you might want to start by finding the maximum drawdown of the S&P 500 during the global financial crisis. How does that compare with the drop triggered by the Covid-19 pandemic?
With Bloomberg Query Language, it’s possible to get the answer with a simple query. BQL is a new, more powerful version of Bloomberg’s Excel application programming interface that allows for more advanced manipulation of data. BQL has been enhanced with an easy-to-use wizard to help you construct queries.
To start, open Excel and click on Bloomberg. For the wizard, click on the BQL Builder icon on the Bloomberg ribbon. (The enhanced BQL Builder has two tabs—Basic View and Advanced View—at the top of the window. If you don’t see that, contact your Bloomberg representative to be enabled for the new BQL Builder.) At the top of the Basic View, there are two boxes: Securities and Fields. In the Securities box, type “S&P 500” and click on the SPX Index match. Here we want to look at the level of the index rather than at its constituents, so if the box says fx Members of, click on the drop-down menu and select None.
Next, in the Fields box, type “max drawdown” and click on the matching item. To specify the parameters for your formula, click on Edit Defaults in the parentheses. To cover the period of the financial crisis, enter a start date of 01/01/2008 and an end date of 01/01/2010. Click Save. Then tick the box for Edit Display Options and tick Show Dates. Click Preview, and you can see the answer: The S&P 500 fell 52% to a low on March 9, 2009.
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June - July 2020