Equities, particularly US equities, performed tremendously well after the pullbacks of 2022, with the S&P 500 index gaining 26.2% in 2023, followed by a gain of 25% in 2024. It was therefore not surprising that the common consensus among most investors was to invest in the US at the start of 2025.
In behavioural economics, the term ‘loss aversion’ is a phenomenon where people believe that potentially or actually suffering loss is more emotionally damaging than the upsides of a comparable game.
In short, it is naturally human to be fearful of losses. That’s why investors have been observed to jump ship when markets turn bearish.
