Despite everything thrown at them so far in 2025, equities have quickly recovered from setbacks. Beyond the US economic and corporate earnings picture, a new wave of forum-driven and gamified app investors may be fuelling this resilience. But how would these relative newbies react in any real market crisis?
12 August 2025
Go back in time to the start of the year and if you’d told an ordinary investor that global equities in local currency terms would be up by double-digits by late summer - despite everything that was coming down the pipe - they would have looked at you incredulously.
The whopping 10.4% delivered by the MSCI AC World Index in local currency terms this year to 11 August has come about despite chaos in Washington, rising budget deficits, volatile long-dated government bonds, trade wars and on-going wars in the Middle East and Ukraine. One cosy explanation has been that the US economy has been a bedrock of certainty in a world sorely lacking it. To an extent this is true, with unemployment at just over 4% and wages (just) outpacing inflation. But that narrative may be faltering at the edges. June’s non-farm payroll numbers revealed 147,000 jobs added to the US economy, but a sizeable proportion of those came from government additions in the form of teachers. Corporate earnings have seemingly been on a stronger footing, but among some of the bigger tech firms revenues appear to be being propped up by ‘old’ businesses like advertising and cloud computing rather than the payoff from all that AI spend.
Instead, a third explanation comes into view with the changing nature of retail stock investing in America. The latest generation of investors missed the serious meltdowns of the technology unwind of 2001-03 and the Global Financial Crisis of 2007-08. This may have encouraged more confidence in markets, thereby contributing to their resilience. The rebounds from 2022 (inflation, rate rises, Ukraine) and April this year (Liberation Day) were underpinned by continued investor inflows which in turn come from the growth of a new equity culture in America. According to the St. Louis Federal Reserve, equities now account for nearly 45% of US households’ financial assets. Vibrant forum chats and gamified brokerage apps like eToro, Webull, Acorns and Robinhood serve to create engagement and commitment from investors which has stabilised the market when in another era it might have just melted down as expected. The question then becomes how permanent all this is and what would happen if there was (whisper it) a really, really significant market crisis.
Invested in every sense – US households’ equity allocations are elevated by historical standards:
From 1 Oct 1951 to 1 Jan 2025
Source: St. Louis Federal Reserve
Past performance is not an indicator of future performance and current or future trends.
Past performance is not an indicator of future performance and current or future trends.
Julian Howard is Chief Multi-Asset Investment Strategist at GAM Investments. This blog represents the views of GAM’s Multi-Asset team.
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The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. Past performance is not an indicator for the current or future development.
The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. Past performance is not an indicator for the current or future development.