Fear of Missing Out

Fear of missing out on profits that others are reaping explains why so many amateur investors get in at or near tops.

Fear of missing out, abbreviated FoMO, is commonly used to describe the addictive qualities of social media, though it just as well describes one of the most predictable mistakes investors make.

The Oxford Dictionary has succinctly defined it as  “anxiety that an exciting or interesting event may currently be happening elsewhere, often aroused by posts seen on a social media website”.

I think a good case could be made that the driving forces of the markets are NOT best thought of as fear and greed, but rather fear of missing out, and fear of loss.

Investors are bombarded with FoMO-breeding information too.

Unless you live completely off the grid, you are going to hear about the world of finance seemingly everywhere you turn.

  •  The radio news reports most often end with how much the "DOW" is up or down at that moment or on the day.

  •  Television news seems to love pictures of men in colored coats waving their arms around with big smiles (or hanging their heads, but that's for fear of loss).

  •  Newspapers can always fill space with what's up or down or may be going up or down tomorrow.

  •  Then there are the financial news channels that seem to run endless interviews, stories, explanations, graphics about what's hot and what's not.

  •  And, that doesn't take into account all the gossip, bragging, and selective memory of co-workers, friends and family members . . . especially when prices are going up.

There are ways to manage your feelings so that they aren't tripping you up over and over that are worth learning.  They are described as they might apply to intimate relationships in the pages about Byron Katie's "The Work" and/or mindfulness HERE or HERE.  

In the short term accepting that feelings will happen seemingly on their own and not letting them control your decision making is the best choice. 

It's much like a driving a car that you know pulls to one side when you apply the brakes and taking that into account every time you slow or stop. 

The pressure to not be left behind by the herd is always there . . . whether you fall for it or not is up to you.

Knowing that this is totally predictable is helpful. 

  • It happens to everyone.

  • Count on it.

  • Have a rule-based trading/investing plan and stick to it.

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