“The investor’s chief problem—and his worst enemy—is likely to be himself.”

Benjamin Graham, Investor

The Fear of Missing Out

April 15, 2019

We’ve all experienced “FOMO” at some point in our lives. With the advent of social media, the “fear of missing out” has become even more prevalent. Let’s face it, some people can’t go 15 minutes without looking at their phone to check the latest and greatest on Facebook, Twitter, and the like.

In the end, the fear of missing out is largely a counterproductive emotion. Anti-social behavior, jealousy, envy, along with a dissatisfaction for one’s current situation are all by-products of FOMO. Fear of missing out can even cause us to make poor decisions – decisions that we wouldn’t have otherwise made.

When it comes to the stock market, FOMO is an investor’s worst enemy. It’s often exacerbated by “recency bias.” In other words, investor emotion is heightened by either fear or greed, depending upon the stock market’s most recent behavior. With the S&P 500 losing 9% in December, fear was rampant. With the Index recovering throughout January and early February, that fear subsided, and the FOMO effect began to rear its ugly head. As a result, some investors are quick to forget the importance of a balanced portfolio and the role that it plays in adapting to both bull and bear markets. In the end, investing is not a competition – but instead a means to a goal.

The article above is an excerpt from the Q3 Quarterly Market Commentary. Here is a link to the most recent issue. Complete the form below if you would like to get this emailed to you each quarter.

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