Fear, Not Risk — Treussard Talks with Rob Arnott and Ed McQuarrie
In this episode, Rob Arnott and Ed McQuarrie argue that fear—of loss and of missing out—better explains asset pricing than traditional risk, with clear takeaways for portfolios and investor behavior.
Rob and Ed revisit two centuries of market data to show how fear—more than abstract “risk”—shapes expected returns. They illustrate why the equity premium is not guaranteed, how factor effects can be reframed through fear of loss vs. fear of missing out, and what that means for diversified portfolios.
In fact, sometimes the “risk premium” may be negative when FOMO dominates.
Why this matters
Many investors assume an ever‑present equity premium. If fear truly drives pricing and premia vary with cycles and starting yields, both portfolio design and client guidance may need to adapt.
What you’ll learn
Why 20th‑century market returns may be an outlier
What challenges “stocks for the long run”
How fear of loss vs. FOMO shifts across cycles
The discussion reframes fear away from simply being ‘irrational.’ Fear is arational and omnidirectional—it drives both the urge to avoid losses and the urge to chase gains. The classic risk-return models ignore this, but deep cycles of loss aversion and FOMO continually reshape market opportunities and traps.
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Learn more and take the next step
If fear—not abstract “risk”—is what truly drives markets, your own investment plan should be designed not only to manage your own fears but also to navigate the emotional waves created by others.
By acknowledging the psychological forces of fear, you can build a resilient, goal-aligned portfolio that balances protection and opportunity through thoughtful asset allocation and behavioral awareness.
Let’s collaboratively design a comprehensive whole-balance-sheet strategy tailored to your unique situation, so you can gain greater clarity, confidence, and control over the full scope of your wealth—empowering you to navigate complexity and achieve your long-term financial goals with greater agency.
Disclaimer
The content of “Treussard Talks” is for informational and educational purposes only and should not be considered financial advice. Views are those of the host and guests, not necessarily Treussard Capital Management or its affiliates. Consult your own advisor before making investment decisions. All investments can lose value, including principal. Full disclosures at treussard.com.