It's an old cliché that the five most dangerous words in financial markets are ‘it is different this time' and cynical investors howl with derision when they hear this line.
In practice of course, economies and markets are dynamic with constant change and too much ‘autoregressive thinking’ - merely extrapolating historical trends - can be just as dangerous as overemphasising trivialities. Theorising aside, there are a couple of big changes afoot, one of which investors are underestimating - the nature of the global economy - and the other they may be unaware of - investor behaviour. Hopefully everyone has now realised that the ‘nice decade’, as Mervyn King so quaintly puts it, is now over. What probably isn’t fully understood, and this worryingly includes a nu...
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