Fighting FOMO

May 26, 2020 | Jeremy Goldfarb


With stock markets fighting their way back from the depths of the March lows (at a pretty torrid pace!), most investment portfolios have been restored to some semblance of order. Behind us for now, are the days of mass panic, that were set off by the onset of the COVID-19 fears and a complete shutdown of 4 billion global residents, along with their respective economies. For now......


One of the hardest things to do when a sell-off occurs, is to hang on. Hang on to quality assets in an investment portfolio that are getting beaten down along with the rest of the market, even though they may be of much greater quality than the masses. There is an instinct to sell everything, go to cash, and wait for brighter days ahead. If you did that, then you are not alone. As an advisor, I had several clients demand that we go to cash, despite my encouragements to the contrary. 


The stock markets have since rallied from those lows, and quite a bit of ground has been recovered. I am not going to get into whether this is justified or not.....I'll save that for another day. 


An equally difficult task, is to avoid getting caught up in a rally. FOMO , or "Fear of Missing Out" is a powerful emotion. When things appear to be cruising for higher altitudes, it is easy to get caught up in a buying spree that can put you into a pickle if things get ugly again. 


There is no problem with acquiring good, long term assets that show stability in times of difficulty, but just as we avoided the mass panic when things turned very ugly, avoid the mass euphoria as it may potentially be ill timed, and possibly misplaced.