Disciplined approach to investing avoids behavioural bias errors
The first half of 2016 was characterised by high volatility in equity markets as a result of conflicting global growth signals from different parts of the world. With political and economic uncertainties being the drivers of markets, there is no clear direction as to what markets will do going forward. The instability in oil prices has been a strong theme - resulting in volatility in commodity prices and energy companies’ stocks. As a result of slower economic growth, especially in developed markets, we saw central banks intervene through accommodative monetary policies. The Federal Reserve reviewed its outlook from four rate hikes this year to just one, and in the first half of the year, they did not raise rates as a result of disappointing US economic data. The Bank of Japan (BOJ) introduced negative rates where commercial banks are charged for holding deposits. Through this mechanism, the BOJ wanted consumers to spend more, thereby stimulating inflation.