As humans, we tend to believe that what has happened recently will continue into the future. In the finance world, we often describe this tendency as ‘recency bias’ – a common mental shortcut. (Other less technical sayings include ‘the trend is your friend’ or ‘a ball in motion stays in motion’!) Regardless of the term, there’s a compelling reason behind this tendency—often, the specific situation upon which we’ve made assumptions is actually borne out. But sometimes this behavioural bias can go a little too far. A case in point is inflation. We question whether the market’s general view in recent times that ... (full story)