Markets Cycle Between Risk-On and Risk-Off Sentiment

When there are profitable opportunities in the market and people’s risk appetite rises, they’re more willing to invest and start businesses, which creates higher-paying jobs and drives consumer spending. That feeds back into making the market even hotter—a virtuous cycle. Without it, you get a vicious cycle: the market keeps cooling, no one dares to spend or invest, making it harder to earn money, which in turn suppresses spending even further.