How 'animal spirits' impact investing behaviors

Schwab Asset Management CEO and CIO Omar Aguilar joins Yahoo Finance’s Rachelle Akuffo and Robert Powell to discuss how emotions drive investing at Impact.

“Animal spirits tend to be one of the typical behavioral biases that people have when they see things going in a certain way,” Aguilar explains. He pinpoints the herding instinct as a critical psychological phenomenon, particularly evident in trends surrounding the Magnificent Seven stocks and cryptocurrency markets.

The impulse to participate stems from a deep-seated fear of missing out, or FOMO, which Aguilar argues is increasingly amplified by social media. “In many cases, when you look at the economic foundation and the financial foundations of what drives it, it just doesn’t make sense, but as a human, your natural emotional piece is, ‘I don’t want to lose,'” he notes.

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This post was written by Angel Smith