Galloping into the Year of the Taper
With behavioural risks higher and equity returns likely to be lower, investors must address the volatility side of the equation
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IN CHINA, investors have just celebrated the start of the Year of the Horse. But, as they look at the wider financial world, they are also likely to see the next 12 months as the Year of the Taper - a period of intense debate around the international consequences of tapering the Fed's ultra-loose monetary policy, not least in Asian countries such as China, which align their currencies with the dollar.
Despite the taper, investors are more likely than not to reap positive returns from stocks this year. Stocks rose, in fact, on the day the taper was announced in December.
But, as recent jitters over Asian markets have shown, investors should also steel themselves for increased volatility.
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