Market changes affect risk tolerance, study finds
Tuesday, September 28, 2010 - 15:56
in Psychology & Sociology
As the U.S. economy continues to lag, many investors remain wary about taking risks with the stock market. Now, researchers at MU have concluded that this attitude toward investment risk-taking is more than just a recent trend. Rui Yao, a University of Missouri assistant professor in the Personal Financial Planning department in the College of Human Environmental Sciences, has found that during the past two decades, the risk tolerance of investors is positively correlated to the movements of the stock market, meaning that investors are likely to invest more when market returns are high, and withdraw partially or even completely from the market when returns are negative.