Oxford Risk: Investors face emotional rollercoaster as volatility surges

Oxford Risk: Investors face emotional rollercoaster as volatility surges

23 januari 2025

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Investors face an emotional rollercoaster in the year ahead as stock market volatility surges driven by a combination of policy changes from the Trump administration and the removal of fact-checking on social media sites, behavioural finance experts, Oxford Risk warn.

Its analysis shows knee-jerk emotional reactions to market swings cost investors an average of 3% each year in returns and predicts losses could soar this year as a perfect storm of volatility drives investors to make mistakes and invest in assets they may not even understand.

Oxford Risk says behaviourally-driven financial advice software can help investors and advisers avoid emotional mistakes, but warns that without these solutions in place, investors will likely experience an emotional rollercoaster resulting in bad decision-making and poor financial outcomes.

Analysts are predicting high levels of volatility with markets 'expected to focus more on actual events and announced policy than speculation on social media' with the expected introduction of trade tariffs and other policy announcements from the Trump administration, global inflation, and recession worries and interest rate decisions by central banks the major concerns.

Social media speculation will become more of an issue, Oxford Risk believes, with the scrapping of fact-checking by Meta on its Facebook, Instagram, and Threads sites in the US in line with similar policies on X leading to a rise in misinformation and disinformation about investment.

The boosting of cryptocurrencies and digital assets by the new US administration, which is expected to loosen regulation, will help set people up for an emotional rollercoaster in the year ahead as more investors are attracted to trading Bitcoin and other cryptocurrencies despite many not understanding the risks, the firm adds.

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