Rethinking Risk: Fear's Role in Investing
In today's complex investment landscape, traditional views on risk and return are being challenged. While markets reach record highs, fears from geopolitical tensions and government debts loom large. A new perspective suggests that fear—specifically fear of loss (FOL) and fear of missing out (FOMO)—may drive investor behavior more than conventional risk assessments. Historical data reveals that the expected equity risk premium has been inconsistent, prompting a need for fresh theories in understanding market dynamics. As investors navigate uncertainty, acknowledging the role of fear may help decode today's market phenomena.
