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How much financial speculation can the real economy truly take?

Mint Hyderabad

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October 10, 2025

A tendency to gamble poses big risks to economic stability and the functioning of capital markets

- DAMBISA MOYO

Risk is steadily building across the financial system, fuelled globally by individual investors adopting increasingly speculative, short-term, and risk-heavy trading strategies.

While many business leaders recognize the buildup, they may not fully appreciate its scale and consequences. The risks are not limited to financial markets; rampant speculation threatens the stability of household finances and ultimately of the broader economy.

Risk-taking is set to intensify. Digital platforms and mobile apps have made trading effortless, drawing in a surge of new retail participants. More recently, US President Donald Trump signed an executive order allowing 401(k) pension plans to invest in alternative assets such as private equity, private debt, infrastructure, real estate, commodities and cryptocurrencies. Traditionally reserved for professional investors, these assets are typically illiquid and carry risks that most retail traders are simply not equipped to manage.

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