Market Volatility in 2025: The Year of Market Sense

In 2025, market forecasters are finding it increasingly difficult to explain the heightened volatility in financial markets, dubbed 'the year of markets sense'. Bloomberg analysts suggest that current market predictions are proving to be largely ineffective. A significant focus has been on the growth of artificial intelligence (AI), which is anticipated to positively impact financial markets across various industries. However, historical trends remind us that even well-considered investments can result in substantial losses, highlighting the risks associated with poor investment choices. Reflecting on the 1970s, Wall Street investors predominantly concentrated on the top 10 to 15 stocks, which made up 40% of the market capitalization, neglecting crucial external factors such as geopolitical tensions and macroeconomic policies. This oversight led to the downfall of many 'go-go' US equities from the 1960s, leaving fund managers with significant losses.