What is meant by risk on?

Okay, so “risk on,” right? It’s kinda like… picture this: I’m feeling good, you know? The market’s looking sunny, the news is (relatively) positive, and I’m thinking, “Alright, let’s go for it!” I’m more willing to take a chance, to be a little adventurous with my money.

That’s risk on in a nutshell. I’m happy to put my money into things that could give me a bigger return, even if they’re a bit… well, riskier! Think tech stocks, maybe some emerging markets – things with a higher potential upside, but also a bigger chance of, you know, going south. I remember back in 2020, everyone was talking about FAANG stocks, and there was a real “risk on” vibe.

Now, “risk off”? That’s the opposite. That’s when I start getting all twitchy. Maybe there’s political drama brewing, or the economy looks a little…dodgy. Suddenly, I’m not feeling so brave anymore! What happens then?

I’m running for cover! I’m sprinting to the safety of things like government bonds. Things that are, like, super unlikely to lose me money. Gold is another classic “risk off” play. It’s all about preservation, not growth.

It’s all about how I’m feeling, really, isn’t it? And what’s making me hopeful… or, frankly, scared stiff. Am I alone in thinking it’s basically one big mood ring for the market? You get me?