How Do You Deal With Market FOMO?



2020 will certainly go down as a memorable year. Most people will obviously remember it for the once in a century pandemic and economic consequences which have come from it, but there are also a lot of good things that have happened this year as well which we shouldn’t overlook. From an investor perspective, I think that 2020 will go down as the FOMO year, as I have never seen so much fear of missing out on stock opportunities. I suppose that is what happens when you have the quickest bear market in history followed immediately by the fastest reversal. People have especially felt the FOMO as some of the best brands in the world have catapulted higher this year in value, including Apple and Tesla to name just a couple. FOMO can be dangerous in every aspect of your life, but it can be especially dangerous when it comes to investing. In fact, there may be no greater destroyer of wealth than the poor decisions that FOMO causes. So, doctor, what is the prescription for FOMO?

To start with, you need to realize that success stories told by Uber drivers and neighbors are often as exaggerated as fish stories and frat boy conquests. Just like gamblers, these market speculators often only talk about their wins and forget all about their losses so I would caution you about taking investment advice from the individuals who brag too much. My best advice in dealing with this noise is to try and ignore it. Trust me, if you look at the greater body of work you are likely not missing out on anything, or at least anything you want to be a part of.

Focus on what is important to you. Are you kicking yourself because you are not an owner of Tesla the company or are you kicking yourself because you did not hit the lucky run that someone you know did? When you look at your financial goals are you on track and have a plan in place? If yes, then that is what is important. Why would you risk your future happiness on a gamble? Would you risk your financial future at the casino? If not, why would you risk it betting on highflyers in the stock market which could go either way?

Now I get it, this advice can be easier said than done and it can be fun to be a part of the story. This is where I recommend that a small taste of the action may be worthwhile if it helps to keep the rest of your money on track. We often refer to this as a fun money account and it can be helpful if you are feeling that you just cannot kick your FOMO. In your fun money account we can set aside a portion of money that you are not relying on for your plans and buy into companies which you are passionate about or simply just want to own a piece of. These types of positions often end up losing money, but they do make for good cocktail conversations and so if your goal is just to be in the game then it may not be a bad idea. I know for a lot of my clients; the idea of fun money seems ridiculous but for others it’s a necessary component to their investment planning.

The best advice I can give someone who suffers from FOMO is to simply be happy for your neighbour. If they have hit the lottery win then go celebrate with them and do not let it bring you down. Being truly wealthy means that you spend your time doing what you want when you want. Don’t spend it being jealous.

-Grant White, CIM®, CFP®

Grant White is a Portfolio Manager/Investment Advisor at Endeavour Wealth Management with Industrial Alliance Securities Inc, an award-winning office as recognized by the Carson Group. Together with his partners he provides comprehensive wealth management planning for business owners, professionals and individual families.

This information has been prepared by Grant White who is a Portfolio Manager for Industrial Alliance Securities Inc. (iA Securities) and does not necessarily reflect the opinion of iA Securities. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Portfolio Manager can open accounts only in the provinces in which they are registered.

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