On 5 March 2013 the Dow Jones Industrial Average set a new all-time high, surpassing the previous high of 14,165.50, established back in October 2007. Only the stock market doesn’t seem to recognise that the world is a very different place today when compared to 5 ½ years ago. Many investors talk the bearish talk, yet they walk the bullish walk. This apparent inconsistency is a function of the widespread belief that central bank policy, whether emanating from Tokyo, Frankfurt, London or Washington, provides an effective volatility hedge, allowing investors to ignore the underlying economic and financial problems that continue to simmer.

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