Investors love a good story, but the latest chapter of the emerging markets growth story has come as a nasty surprise to many. There may be much worse to come. Narratives can help to make sense of facts and figures. Stories can convey meaning, by joining up often unrelated information, and they offer hope. But […]
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Tag Archives: Representativeness
Should we worry about China?
May 29, 2015 
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Investors struggle with bubbles. Sure, we know they eventually burst, but lessons are quickly forgotten. Now China is a puzzle: it might look like a bubble, but what to do? Uncontrolled Yen devaluation could break China’s Renminbi peg and trigger more global deflation. But, timing and is hard to assess. Analysts and the press pay […]
Continue reading Are legendary signals – Copper & VIX – still useful?
July 1, 2014 0 Comments
What should investors make now of the mixed signals that question the strength of global equity markets? The copper price and implied market volatility strike a strong emotional chord with many investors. There is widespread faith in the power of these indicators to signal danger. How should investors set this emotion alongside the facts of […]
Continue reading Deflation an unimagined world for investors
May 8, 2014 0 Comments
Experience drives what we recognise and forecast, but deflation is unfamiliar territory. Investors base analysis on what they know and understand; periods of stable or rising prices. But that is not the pattern now; Europe’s inflation outlook is steadily being revised down, but getting little attention. Even if the deflation risk is recognised, the problem […]
Continue reading Smart beta investing and the seduction of labels
October 8, 2013 0 Comments
Smart beta is an impressive investment branding story. The name neatly encapsulates the idea of beating conventional indices consistently, but with little effort and much lower costs. Intellectually seductive, it conveys the concept of market exposure that avoids the costs and behavioural failures of active managers. And simultaneously it gives the impression of an edge […]
Continue readingFailure of Eurozone policies will lead to full QE; positive for shares
April 11, 2013 0 Comments
Europe has given investors little to cheer about this year. After the soothing words about doing what it takes to support the Euro and EU, Eurozone problems seem to be getting worse in 2013. 12% average unemployment across the region – rising over the past year – calls current economic policy into question. Yet, the […]
Continue readingEmotion and the Bank Sector
October 11, 2012 0 Comments
Currently, the troubled banking sector seems to defy conventional analysis. The impact of new regulations, combined with scandals and regulatory fines, seems impossible to calculate. Bank ratings across Europe – and in the UK in particular – show that most investors have given up trying to value bank shares. Many conclude that there are easier […]
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Behavioural Edge 