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. When fear sets in (recession worries, geopolitical tensions, rising interest rates), they shift to "risk-off"—moving money into safer bets like government bonds and blue-chip stocks. You'll hear these terms on financial news when markets are moving sharply. It matters because understanding the mood helps explain why your entire portfolio might rise or fall together, regardless of individual company performance. For example: "The Fed raised rates yesterday, so we're seeing a risk-off day—tech stocks are down while Treasury bonds are up."