Getting Emotional

UBS Chief Economist Paul Donovan explores how emotion, community, and loss aversion differentiate objective assets from speculative bubbles like crypto and art.

Key Takeaways

• 1.An asset's value is traditionally objective, but when driven primarily by emotion (as in crypto or art), it behaves more like a bubble than a stable store of value.
• 2.Emotional ties and community belonging can create price stickiness by making owners reluctant to sell, fearing exclusion from the social group.
• 3.The economic significance of falling prices is determined by ownership breadth; loss aversion in widely held assets like housing has systemic impacts, unlike narrowly held assets like crypto.

Table of Contents

• Getting emotional
• Global asset class preferences definitions
• Appendix
• Risk information
• Generic investment research – Risk information

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