FOMO, meaning fear of missing out, is becoming a major issue among millennials.

Millennials are increasingly worried about being left behind by their peers. They don't want to miss out on what others are doing because they're afraid of being seen as "behind." This fear of missing out (FOMO) is creating a sense of urgency among younger generations.

FOMO has become a popular term in the investing world. In today's market, there is an ever-increasing amount of information around investment decisions, which can be overwhelming. The FOMO effect makes it even more difficult for investors to make good investment choices.

In today's post I will cover what FOMO is, why it's bad and how to combat it.

What Is FOMO?

FOMO stands for Fear Of Missing Out. This is a phenomenon where you feel anxious about missing out on something because someone else is doing it. You think there must be some secret knowledge that makes them happy, healthy, wealthy, etc., while you aren't.

The problem with FOMO is that it doesn't work. People don't become better off just because others are having fun. They're still miserable.

You might start comparing yourself to your friends, family, coworkers, neighbors, and even celebrities. But here's the thing: If you really want to improve your life, you shouldn't compare yourself to anyone. Instead, focus on being happy with who you are now.

In investing FOMO generally leads people to overpay for stocks or undervalue cryptocurrencies. It causes them to buy things that have no value at all. Usually this will be seen in a stock or crypto asset that is rising rapidly. This causes people to panic and buy when the stock may have already ran all the way to it's peak.

The same can happen in the opposite direction when an asset is falling. If their is an investor holding a stock or asset, they may end up panic selling just because of the stock price falling. A stock investors judgement on a company should be their guidance on what to do with the stock, not whether the stock itself is going up or down day-to-day.

Brief History of FOMO

Fear of Missing Out (FOMO) is an important concept within psychology. In fact, it's been around since ancient times. For example, the Ancient Greeks believed that envy was caused by fear of losing out. They thought that people envied those who had more because they feared being left behind.

Social Media makes us feel like there are things happening that we aren't aware of unless we follow certain accounts or posts, and we begin to worry that we might miss out on something good. We start comparing ourselves to other people's lives, and we become anxious about missing out on things.

People tend to compare themselves to others' achievements rather than focusing on what goals they actually want to achieve, and social media allows people to compare their lives to others'. This leads to feelings of anxiety over whether you'll ever reach your goal.

Why FOMO is Bad

Fear of missing out (FOMO) is a term used to describe the mental state of anxiety caused by anticipating future events. In modern culture, it is most commonly associated with social media use. However, there are many ways in which FOMO affects our lives.

In one study, researchers found that people felt anxious about missing out on something fun because they thought others might enjoy it too. They also reported spending more money on products they didn’t really want or need. Another study showed that people who feared they wouldn’t see something cool enough tended to be more likely to make impulsive decisions.

The problem with FOMO isn’t just that it makes us uncomfortable. It also tends to lead us to do irrational things. For example, research suggests that people who experience FOMO are more likely to text while driving. And according to a survey conducted by car insurance provider Allianz Global Assistance, people who fear missing out on something fun are twice as likely to speed compared to those who aren’t worried about being left behind.

My Experience With FOMO

Throughout my 4 year investing journey I have experienced multiple FOMO occasions. In fact they may crop up fairly often. Over time I have managed to get my FOMO under control mainly be being able to notice when I am about to make a decision based on FOMO.

One time I experienced FOMO was early into the covid lockdown. I seen Kodak got some deal to help with something to do with the pandemic (you can tell I didn't do my research at the time). Because of this I jumped into the stock after it had already ran up a massive amount.

Long story short, I ended up buying at a really bad time and lost 80% of my investment. Thankfully, due to me recognising this as risky, I only risked about 2% of my portfolio overall. This saved me from being wiped out.

I think there will be times any investor will fall victim to FOMO at some point. Going through that experience can help you learn how to recognise and ignore FOMO when it's not really a good idea.

How To Overcome 'FOMO'

The best way to combat FOMO is to focus on what you can control. If you try to control everything, you'll never feel good about yourself. Instead, focus on one thing at a time. Don't worry about what happened yesterday or next week. Instead, focus on what you can do now. You can't change the past, but you can take steps to improve your future.

Research

Fundamental analysis is important, but it’s not the only thing you should consider when making an investment decision. There are many factors that go into determining whether a stock is worth buying or selling. Some investors prefer to use technical analysis, while others favor fundamental analysis. Both types of analysis play an integral role in helping investors make well-informed decisions.

There is no one correct approach to fundamental analysis. You don’t want to invest blindly; you must always conduct some form of research before committing money. However, you shouldn’t limit yourself to just one type of analysis. Rather, you should try to combine both approaches to ensure your investments are sound.

Stick to a Trading Plan

A successful trading strategy includes both short-term and long-term objectives. Short-term goals are important because they help you make quick decisions about whether to buy or sell. For example, if you see a stock price drop 20% within minutes of buying it, you know you made a mistake. On the flip side, if you see a 10% gain over several hours, you know you made the right decision.

Long-term goals are equally important. They provide direction and focus for your investing efforts. If you want to retire early, saving for retirement is one goal. Another might be paying off student loans. Whatever your financial goals are, consider them when creating a trading strategy.

In addition to having clear goals, a good trading strategy incorporates risk management. Risk management helps you avoid losing too much money in case things go wrong. This is especially true when it comes to cryptocurrency. Cryptocurrencies aren't backed by anything tangible; therefore, there's no guarantee that prices won't fall even further.

Summary

FOMO (fear of missing out) is common among investors. It causes people to miss out on great opportunities because they are too concerned with avoiding losses. The solution? Focus on what you can control instead of obsessively monitoring every aspect of your life. Also, learn from your mistakes so you can avoid repeating them. Finally, create a trading plan that combines both fundamental and technical analysis to maximize your chances of success.

I hope you have enjoyed this blog post. If you found it helpful then consider sharing it with your friends on social media. You may also like to read my other blogs seen below.

Thanks for reading 😀

FAQ

What Is Panic Buying?

Panic buying is a type of behavior marked by a rapid increase in purchase volume, typically causing the price of a good or security to increase dramatically.

Source: investopedia.com

What Is 'FOMO' In Investing?

When it comes to investing, FOMO means the fear of missing out on investment opportunities, especially those that have a lot of buzz around them.

Source: seekingalpha.com

How to get over FOMO?

The first step to defeating FOMO and increasing life satisfaction is to understand what it is and where it comes from. Once FOMO has been recognized, actions can be taken to remove it from a person's life. Most suggestions for people looking to overcome FOMO incorporate taking breaks from social media and paying more attention to the moment and the surrounding people and environment. Being more in the moment removes threats being perceived by the amygdala and lessens stress and fear.

Source: techtarget.com