A REVIEW OF THE ONGOING NARRATIVE AND OUTLOOK FOR NEXT FEW MONTHS: Thrills, Chills: (R)ecession Looming, (I)nflation at historic levels and Normalization of Monetary Policy, De-(D)ollarisation, (I)mpact of Russia-Ukraine Crisis, and Rise in (C)ovid cases.
For economists, investment managers, advisors, or investors, transitioning through the current challenging environment which we characterize as “RIDIC” (meaning preposterous or absurd) could be an exciting (thrills) or scaring (chills) time depending upon the outcomes of portfolio returns or an investment advice or a macro call is right or wrong. As these outcomes and advice are based on one’s judgements, we would like to share a quote from the author “Daniel Kahneman” here – “You seem confident in your conclusion, but this is not an easy problem: there are cues pointing in different direction”.
What is recommended to market professionals in such challenging times is to adapt to deliberative system of thinking to give better investment advice – using experience and information to more objectively update one’s belief to represent the world more accurately. The more accurate one’s belief is, the better the foundation of the advice and the outcome of the portfolio returns.
Before we cover more details on deliberative system of thinking and how we at Lighthouse Canton adopt to such a thought while building our investment outlook, lets dwell in deeper to review the “RIDIC” environment and why we characterise the current environment as challenging.