We’ve discussed how the fear of missing out (FOMO) could keep you from saving money through reckless spending, but FOMO can also affect your investing strategies.
“You see how some people are making a killing on various investments – look at the soaring value of Bitcoin – of course you’ll want in too. But following these types of trends just from the headlines without investigating or seeking advice may prove detrimental,” warns Richard Cayne of Meyer International.
News headlines are not investment advice
Bitcoin hits $15,000! Snapchat IPO Valued at $22 billion! Headlines like these will make use all regret not joining in the fray. Media outlets, even those covering business, use sensationalism to draw in readers. Then there’s the chatter at happy hours all over the world – a colleague of a colleague tripled his investment on digital wallet wristwatches or a plantation of hybrid avocado-coffee trees.
New innovations like Bitcoin are interesting, but how much of the latest breath-taking surge in price is due to actual value, and not speculation? Also, does this mean that the next cryptocurrency to come along will see such incredible gains?
Remember Snapchat? There was such hype about this company, it seemed like everyone wanted in. Google wanted to buy it outright! Facebook was sniffing around too! So, it looked like a winner when it IPOed at almost $30 a share. It hasn’t seen a gain since. Could it be that those who missed out on the Facebook or Google IPOs thought this was their chance? Perhaps they didn’t look beyond the fantastic valuations to the actual company’s operations and revenue streams?
Don’t let FOMO lead you to knee-jerk reactions
“Everyone else is doing it” is not a viable investment strategy. And it is very likely that everyone else is not doing it. Just as we need to control the urge to spend on a wifi-enabled toothbrush just because all our friends have one, we need to stop and consider what we invest in as well. The next cryptocurrency or complex investment instrument may truly be an amazing opportunity, but take a little time to find out more – read or ask an expert – before you let FOMO take control.