22 October 2025
In the latest piece for the Enterprising Investor, Barbara Stewart, CFA explores how investor sentiment in 2025 is being pulled in two directions: dramatic new themes like generative AI and geopolitical risk, on one hand, and enduring worries such as high fees, behavioral traps, and market timing on the other.
The Five Shaping Forces
Stewart’s article distills five major themes driving today’s investor thinking:
- Tariff/JOBS fear & mistimed exits - Many investors admit to panicking during earlier market shocks and timing the market based on fears, only to miss significant subsequent gains. Stewart offers a cautionary tale: staying invested often trumps perfect timing.
- AI Hype and the search for “undiscovered” winners - With generative AI commanding global headlines, many are scanning for the next uncut gem. Stewart warns that while the megatrend may be real, the undiscovered needle in the haystack becomes hard to find when the wave is already in motion.
- Questioning money managers: “Are they missing it?” - Investors wonder if their asset managers are keeping up with major trends like AI. The question - “should we DIY or trust someone else?” - resurfaces and links back to cost, transparency and value.
- Fee Fatigue comes to the fore - Despite the glamour of new themes, many investors are increasingly focused on something far more prosaic: fees. Are they paying too much for the promise of innovation? Stewart points out that fees remain a surprisingly large drag on lifetime returns - and that pushback is growing.
- Holding on to losing stocks and behavioral strain - The “why am I holding this?” question is more present than ever. In a world of constant change, the old losers stay around too long, anchored by hope rather than fundamentals. The article argues for a disciplined re‑assessment of holdings.
Why this matters for CFA Society Italy Members
For Italian investment professionals and CFA charterholders, Stewart’s insights carry important implications:
- Client conversations need to evolve: As Italian investors become more aware of fees and more curious about themes like AI and sustainability, advisors must navigate between excitement and discipline. Understanding when an investor is drawn by hype (e.g., “undiscovered AI stock”) or haunted by fear (e.g., “what if tariffs hit Italy?”) is key to providing value.
- Fee transparency is no longer optional: With fee fatigue rising globally, Italian professionals must show clear value for cost — especially when competing with low‑cost index strategies or cross‑border alternatives. Promoting a fee‑conscious culture enhances trust and retention.
- Strategy design must incorporate behavior: The round of market turbulence in recent years has made behavioral risk real. Professionals must embed frameworks that help clients avoid reaction‑driven mistakes (panic selling, chasing the latest trend) and maintain long‑term focus.
- Themed Investing needs reality checks: While themes like AI or fintech are exciting, many have already been priced in. For Italian portfolio managers, that means doing the hard work: assessing moat, execution, valuation, and whether the story is still underpriced.
- Local market nuances matter: Italy’s investor base, regulatory environment and market structure differ from the U.S. and UK. Understanding how sentiment plays out in the Italian context — e.g., fee structures in Italian funds, retail investor tax incentives, the role of private clients — gives much‑needed local flavour to global trends.
Conclusion
Barbara Stewart’s examination of investor sentiment in 2025 is a timely reminder that while markets evolve rapidly - with AI, geopolitics and technology dominating headlines - many of the foundational questions remain the same: Are we paying too much? Are we buying hype instead of substance? Are we holding when we should move? For CFA Society Italy members, mastering this balance between innovation and discipline is not just good practice - it’s essential.