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—they buy stocks, especially volatile growth companies and emerging markets, chasing bigger returns. When fear sets in (recession worries, geopolitical tension, market crashes), they shift to "risk-off"—they sell stocks and move money into safe havens like government bonds and gold. You'll hear these terms on financial news when markets are moving sharply. It matters because understanding the mood helps explain why entire market sectors rise or fall together, independent of individual company performance. For example, during risk-off periods, even solid tech companies might drop as investors flee to safety.