Most people, investors or not, tend to base their current views on what is most recent in memory. In good times, we may expect them to continue for the foreseeable future; in bad times, we often underestimate our ability to move forward. We all tend to “drive by the rear-view mirror” to some extent, basing our decision making on what has just happened.
The summer did not see much respite from the volatility that has gripped the financial markets. The bearish commentators continue to evoke fears that the aggressive moves by the central banks in raising interest rates will inevitably push economies into recession.
Keeping expectations on an even keel has been a challenge when it comes to the financial markets. In 2022, we have experienced a rapid reversal in both direction and sentiment. With persistently high inflation, and with headwinds from the Ukraine war and the spring Covid shutdowns in China, the central banks have taken a more aggressive stance to try and temper inflation.
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