By Steven M. Sears
Everyone knows fear and greed power markets, but few realize that many investors have lost the ability to be fearful.
Even now, as America and Iran waver on the cusp of war and oil prices become weaponized, the S&P 500 index is near record highs.
This suggests that generational experiences since the 2008-09 financial crisis have changed investor sentiment in ways that aren't well understood.
If the average Wall Streeter is 40, if not younger, many analysts, traders, and fund managers were 19 when the financial crisis began and 20 when it ended.
The absence of memory, combined with experiencing stocks always rising, is an underappreciated risk factor as younger investors emerge as a powerful market force. This group has so far never met a decline not worth buying, or difficult market conditions without a silver lining, which raises a disturbing question: What horror must occur to scare them?
Anyone who invested during the financial crisis knows what it is to see major companies fail, such as Bear Stearns and Lehman Bros., then two of the world's largest banks. They have lived through other scares, including the dot-com bubble bursting, the 9/11 terrorist attacks, and the 2011-12 euro zone crisis.
Since the financial crisis, though, stocks have benefited from a prolonged period of low interest rates, and technology has made basic stock and options investing like playing videogames. Prediction markets have encouraged betting on almost any topic. Exchanges have introduced products like zero-dated options to let investors risk a little money to potentially make a lot.
"Laissez les bons temps rouler" is as relevant to younger investors as Warren Buffett's advice to be fearful when others are greedy and greedy when others are fearful has been to older generations.
If the past 20 years have rendered fear irrelevant, could risk be mispriced? Are investing algorithms flawed because they are likely overweighting historically atypical data?
We raise these concerns at a time when investor reactions often seem incongruous with reality. After diplomatic negotiations between America and Iran collapsed in Islamabad, investors shrugged it off. They remain unbothered by President Donald Trump's decision to use the U.S. Navy to blockade the Strait of Hormuz, by oil trading above $100 a barrel, or by Iran threatening to attack ships and ports.
The news flows that pace trading are cinematic, driven by Trump's often outrageous social-media posts.
He threatened to bomb Iran into the Stone Age, only to negotiate. He criticized the pope for criticizing him and posted an image of himself looking like Jesus healing the sick. Such communication was once unimaginable at the highest levels of power.
Many people are numb or marinating in indignation and anger. Little surprises them. This has fostered a golden age for propaganda that has made it hard to differentiate agitprop from fact as social media replaces mainstream media. This is especially true for the postcrisis generation.
X, Instagram, and Truth Social reduce complexities once aerated in newspaper articles into media morsels. People are stuck in heightened emotional states that block the slow, calm thought needed to contemplate difficult issues.
On Monday, Bank of America noted that investors were tilted toward "de-escalation trades," and JPMorgan Chase and Morgan Stanley recommended buying stocks. They might be right, especially if earnings reports show companies remain resistant to the weirdness.
Ultimately, society's ingrained fear of missing out on making money will be usurped by the fear of losing money. Then, America's postcrisis gambling addiction will be revealed for what it is.
Email: editors@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 15, 2026 01:30 ET (05:30 GMT)
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