Risk-on / Risk-off

Risk-on and risk-off describe two opposite investor moods that swing based on economic confidence. When investors feel optimistic about the economy, they're in "risk-on" mode—buying stocks, especially volatile growth companies and emerging markets, because they're willing to chase bigger gains. When fear kicks in (recession worries, geopolitical tensions, rising unemployment), they shift to "risk-off"—dumping stocks for safer bets like government bonds and gold. You'll hear these terms on financial news when markets are swinging wildly. They matter because understanding the mood helps explain why entire market sectors move together, even if individual companies are doing fine. For example, during risk-off periods, even solid tech companies might drop alongside risky ones as investors flee to safety.