No one, including investors, is immune to recency and present bias. Humans tend to place more weight on current events than on past ones, or to settle for immediate rewards rather than wait for larger ones in the future. The former can cloud our judgment and impede rational decision-making, while the latter, called time-inconsistent preference in economic terms, can be viewed as a plausible synonym for headline trading.
The much-criticised patience afforded to Vladimir Putin by Donald Trump has eventually worn thin as the obfuscation deployed by the Russian President to any form of ceasefire in Ukraine has at last gone beyond tolerance. Announcing sanctions on state-owned Rosneft and privately backed Lukoil, the US Treasury Secretary, Scott Bessent noted the Kremlin’s refusal to end “this senseless war” with his President claiming it was he that cancelled the proposed meeting in Budapest.
Any trending market is susceptible to retracements, and intriguingly, most asset classes reversed course simultaneously yesterday. The most remarkable turnaround came from gold, which shed nearly 6% of its value after rallying more than 30% in just two months. There was no clear explanation for either the timing or the magnitude of the decline, though events from yesterday offered a plausible rationale.
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