Forex: EUR/GBP looks to confirm daily high

JP Morgan analysts caution against the exclusively short-term orientation that many investors show, as even themselves have had to shift focus more to the medium term, “and this keeps us solidly overweight equities against fixed income, concentrated in the US and Japan”. The argument points to three misconceptions. First, that it is often argued that to de-risk a portfolio, one should hold more bonds, as they have much lower volatility than equities: “We contend this is true over the short term, but much less so over the long term, as much of equity volatility is noise that disappears over holding periods of 3 years and more”, wrote analyst Jan Loeys, adding that “bonds are nominal assets that move with inflation which is not a stationary process. Over periods of more than 10 years, we note that US equities do not show that much more volatility than Treasuries”. Also, risk should be seen as the probability that you fail your objectives. Having said that, “pension funds that are underfunded would maximize the chance that they fail their liabilities if they invest largely in low-yielding fixed income. With equities, they would at least have a fighting chance”.