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2nd Quarter 2019 CIO Commentary

Are You Nervous Yet?

The world can be a scary place, even for investors. While we may not be on the front lines protesting the proposed extradition law in Hong Kong or in the Straits of Hormuz defending supertankers filled with oil against attack, these serious situations can cause great injury to investment portfolios, including ours. So, at least for us, the answer is yes, we are nervous. We struggle to assess geopolitical issues about which we have limited insight and even less control. These episodes tend to spring up and take center stage quickly, with a concomitant impact on financial markets. Typically, then, our job is to “read and react,” which means something different to every investor. For those investors whose amygdala[1] is in charge, the tendency is to sell now and watch things unfold while waiting in cash. Many humans are wired this way. The modern-day economic answer to the evolutionary survival question “fight or flight” is often to sell on bad news.

This is an excerpt from a longer article. Please download the PDF to read more.
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