That may be true and we find this narrative compelling, but like many forecasters, you can be right about the event or right about the timing but you are unlikely to be right about both. Without a story about when repricing will occur, the ECB's assertion is without much value.
Nevertheless, investors should build their portfolios to have a contingency against rapid repricing.
An investor should construct a portfolio to address these three issues:
- What is the portfolio beta desired?
- Where is the portfolio generating alpha?
- What strategies will produce gamma or positive convexity?
Portfolio beta can be changed to reflect relative desire for risk. Alpha can be found through looking for unique strategies and manager skill. Portfolio gamma usually will not come from an asset class, so active strategies like trend-following are needed for creating dynamic sensitivities to market beta. The portfolio gamma comes from a macro strategy that will increase asset class exposure to winner and decrease exposure to losers. This is the managed futures trend-following story.
Think about what is your portfolio BAG.