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Shift in behavioural approach to investing needed in a zero interest-rate world

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A typical rule-of-thumb is for investors to rebalance their portfolio at least once a year to bring it in line with their desired asset allocation. This has the automatic effect of taking some profit on the winners and buying more of the losers cheap. This is a disciplined way of "buying low and selling high", which removes the emotional bias from investing.

INVESTORS increasingly find themselves in a catch-22 situation today. With almost US$16 trillion worth of bonds worldwide, mostly issued by European governments, offering negative yields, investors are sure to lose money if they hold on to these bonds till maturity.

And yet these bonds...

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