What is FOMO?

The fear of missing out, sometimes abbreviated and called FOMO is an irrational fear that sometimes makes you make rash decisions just because you don’t want to miss out. It’s fed by anxiety and wanting to have the best possible outcome. Limited time sales, buying stocks, placing bets, once in a lifetime events. You have made decisions because of FOMO without even knowing it.

Falling for the scam?

When have you become a victim of FOMO?

When buying tickets for an event “seats selling fast” and the ticking timer on the top of your screen. You feel rushed, you feel the anxiety. If you don’t act now you won’t get what you want. These are all methods to make you make those impulse decisions.

Businesses use these tactics to help them sell more. With black Friday coming up soon businesses take full advantage to make you think stock is low and prices will go up tomorrow, while in reality these prices won’t be much different. There will always be a sale, every holiday seems to be an opportunity to have “the biggest sale of the year”.

FOMO affects stock picking too, it can make you make irrational decisions based on you thinking the stock will go up tomorrow. As a long term investor this should be the least of your worries. A 5 to 10 cent difference in price will be insignificant if you’re investing for the long term, as you will probably see bigger returns in later coming years anyways. The saying always goes “time in the market not timing the market”.

Taking time to think

Take a moment to think about the situation, don’t act on impulse. What I like to do when shopping for big items (usually over $100) is set a 3 day rule. If you still want the item in 3 days then it’s fair game and you go ahead and buy it. If in 3 days you’re still thinking about it, it’s something that you will actually use/need.

When shopping online you can add these items to your cart and leave. Sometimes the retailer will email you to “remind” you that you haven’t bought the items. If they get desperate they will sometimes email you a coupon to nudge you into purchasing said items.

Regret

If you had a tough choice to make and you “missed out” don’t let it affect you too much. “I should have bought that jacket, now it’s selling for $40 more on the second market”

You have to ask yourself, were you buying this for yourself? Or did you buy this with the expectation to make money? If it was something you really wanted you wouldn’t care paying a $40 premium on this item, as we individually put value on items we want.

Don’t make the decision now and pay the price later. Always be aware of your budget and remember whether it be a stock or a big sale. Even if you did miss out, there will always be another opportunity in the future.

Thank you for reading and I’ll see you next Sunday,
– Pablo