It may sound like a bad joke: “What do prisoners, senior citizens and market investors all have in common?”. But for a certain subset of each, the answer is very real: Chronophobia or fear of the future. Classified in the DSM-5, its sufferers are often characterised by acute anxiety or distress when pondering future events.
In essence, the best-case scenario for those investors flocking to value is that interest rates do, in fact, impact growth stocks and they merely overpaid for safety. But if interest rates do not have such an effect? They may have sold growth at a loss and paid a premium for value. As was shown in New Age Alpha’s recent piece about interest rates, the link between rates and future stock returns is distorted at the very least, if not utterly uncorrelated. This makes certain investors’ Chronophobia all the more bewildering. Just as most grown-ups know the boogie man isn’t real, so too do they recognise that a single action often results in varied, unpredictable actions a la The Butterfly Effect.
Any investment performance figures quoted herein are for illustrative purposes only and should not be construed as investment advice. Investment advice is offered through New Age Alpha Advisors, LLC a wholly-owned subsidiary of New Age Alpha LLC.
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