2018 was a perplexing year for investment markets, having started apprehensively due to economic growth and rising interest rates concerns, which was then followed by a benign mid-year period of greater optimism and growth, that ended abruptly in the final quarter. By year-end markets of all types - stocks, bonds and currencies - were experiencing heightened investor agitation and volatility.

The ‘disposition effect’ has been described as ‘One of the most robust facts about the trading of individual investors’ (Barberis & Xiong).  Professor Hersh Shefrin (Santa Clara University, USA) describes the effect as ‘a predisposition toward get-evenitis’.

Many things affect the Australian stock market, including the state of the national economy, corporate profits, government policy (including corporate tax rates and interest rates) and business and investor confidence.