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Fear – and how to trade it

Weekly investor research

02 July 2018

Financial markets tend to resort to rules of thumb during bouts of risk aversion, such as the recent fear of trade wars. Yet, since markets often misprice risk during bouts of risk aversion, rules of thumb trading can itself lead to major misallocations of capital and new and different types of mispricing. This is why making big investment decisions during panics is a bad way to manage investments. The Weekly also covers Mexico, where it is third time lucky for AMLO, Argentina’s struggle to regain investor confidence and the recovery in Brazil’s credit markets. The global backdrop is dominated by concerns over immigration in Europe and the growth outlook in the US as core PCE hits the Fed’s target and the White House lets out news of Trump’s FART Act.

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