A majority of the asset markets, including bonds, equities, and currencies, across the world, have been declining over the last few months. The withdrawal of the quantitative easing (QE) and hike in Federal funds rate, the war in Ukraine, and the fresh outbreak of Covid-19 in China are the main factors cited by analysts for this decline. The common question on everyone’s mind is—when will the bonds, emerging market (EM) currencies, and equity markets bottom out? No one has a crystal ball for looking into the future. That’s why predicting the markets is often called a dud’s game. Yet, we can’t give up trying as a lot of our financial as well as real-world outcomes depend on how the financial markets behave.
[This article has been reproduced with permission from SP Jain Institute of Management & Research, Mumbai. Views expressed by authors are personal.]