You might never have heard of Futu… It’s a digitized brokerage and wealth management business, headquartered in Hong Kong, and (quite frankly) a dullish sounding operation…so I wouldn’t be surprised if you hadn’t. I certainly can’t imagine any digital broker, still less a wealth manager in a shiny suit, making anyone dissolve into fits of unrestrained joy. But here’s the thing…if you’d invested $11,120 in Futu shares back in 2020, your investment would today be worth $19,904,000, which is enough to make anyone reach for the party poppers. In short, no matter how often some sour-faced analyst tells us markets hate uncertainty, uncertainty is still the magic alchemy behind volatility…and, packaged up the right way, we all love volatility. Especially when it comes to publicly traded shares.
That’s because stock markets usually have an inherent long-term bias, with share values being perceived to have a tendency to appreciate over the long run; so, on the whole, market participants have limited interest in short-term price movements. Unless that is you’re a died in the wool Stag (buying in on a float and selling days (or hours) later when the listed price becomes elastic), or a Shorter of Shares to whom the normal rules of life don’t seem to apply, it makes no sense to buy a share and sell it as soon as the price drops a couple of points. That means volatility is higher in a bear market when share prices are falling rapidly, and (much) lower in a bull market when fears of substantial falls (or gains) are minimal.
The exception is what is quaintly termed FOMO, or Fear of Missing Out: in that case, a bull market can quickly generate high levels of volatility because…well, because even a small initial spike in price can draw in hordes of new investors afraid of missing out on the gold rush: then the share price rises exponentially. It’s pretty much what happened with Futu shares over the last five years: in a bull market, and over a single month at the beginning of 2021, the share price more than tripled (from $42 to $140). And then, as FOMO forth dissipated, the price fell to $75 in January 2025, before soaring to $190 six months later (substantially because the FOMO herd was then back in harness).
You see what I mean by volatility? Nothing could be more uncertain than a fear of missing out, but it proved in fact to be the alchemy behind otherwise unimaginable volatility…not to mention pots and pots of cash.
Currency and Commodity Markets
In contrast, currency and commodity markets tend not to have a natural long-term bias: during both bull and bear markets, prices oscillate (often wildly) in either direction, and often result in minimal net change over the short to medium term.
Bitcoin is a perfect example.
On 14 April this year, Bitcoin was priced at $84,549, and after spiking at a giddy $123,857 on 6 October, fell back to $84,209 by 22 November (barely a month later). You don’t tend to find such precipitous ups and downs on equity markets, so naturally (absent a catastrophe such as the 2008 Financial Crash), that makes commodities and currencies a much more short-term proposition. Volatility is still a driver of wealth, but unless you know when to sell and when to sell quickly, it can also be a shortcut to losing your shirt.
So why does all that matter?
Well, it provides relevant context to a couple of stories that were splashed across the financial pages over recent months.
AI and Emerging Technologies
First, there’s the persistent rumbling suggestion that AI stock prices are “bubbling”, with all the potential menace that preceded the DotCom crash of 2001. That might or might not be right, but it certainly isn’t a foregone conclusion. For example, barely 10% of US corporates have so far invested meaningfully in AI, when it seems virtually certain that all of them eventually will. That’s an enormous pent-up demand, and the prospect of exponential growth has naturally buoyed up the sector (just look at the recent surge in Meta’s share price). The historic equivalent would be to predict a crash in the share prices of Apple and Microsoft at a time when only 10% of us had personal computers.
A bull market may not be a natural home for volatile spikes in price, such as those currently underpinning the AI sector, but the market fundamentals seem strong…and don’t forget the FOMO effect, which is itself consistent with long-term growth.
And as for Bitcoin: far too often it’s been pushed forward as the poster boy of emerging technologies…in particular Blockchain, but they’re not shackled together hand and foot. Blockchain has already shown that it has enormous potential to revolutionise the operation of international markets, and that potential is in no way mitigated by the recent fall in Bitcoin prices: not least because Bitcoin operates in an altogether different market (as to which see above).
Red Ribbon Asset Management (www.redribbon.co) was established more than a decade ago to harness the full potential of fast-evolving and sustainable international markets: consistently meeting the demands of global communities as part of a circular economy, whilst remaining committed to the demands of People, Planet, and Profit.