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Investing FOMO

Updated: Jan 11, 2021

Is it FOMO Fo Sho? Are the markets experiencing a little extra nudge from investors buying because they don’t want to miss out on any recovery?

Peter Griffin thinking

Moving forward, we may always look at markets as in a “post COVID” economy. The economy and stock markets took a massive (and I mean massive) hit at the beginning of the corona crisis. Where do things currently stand, and moving forward, how will stock markets perform?

The Numbers

Well, the Dow Jones Industrial Average bounced back 30% since its late-March low close of 18,591.93 (*note, that is still 18.3% below the February peak of 29,551.42).

The DJIA, or ‘The Dow’, is an Index of 30 stocks used as a barometer of the US Economy. The S&P 500 Index, along with the Nasdaq Composite Index, have risen 31% and 30% respectively, from their late-March price drop debacles. The S&P is an Index of 500 of the largest US companies, which accounts for 75% (by size) of the ENTIRE MARKET of companies, and the Nasdaq includes all companies listed on the NASDAQ Stock Market (>3,300 stocks with a heavy concentration in technology).

It’s worth noting that these indexes are just groupings of stocks, and there is overlap – but they serve to explain how well (or poorly) various markets or segments of the economy are doing on a macro level.

At the time of this article, the Dow [+12.9%] had its highest monthly gain since Oct 2002 [12.5%], The Nasdaq [+15.8%] had its best return since April 2009 [12.3%], and The Russell 2000 (a small-cap index) [+18.8%] had its best month since Oct 2011 [18.8%]. The S&P [+14.1%] had its highest monthly return since 1991 [11.4%].

Are You Having Investing FOMO?

FOMO cuts many ways with this market. If you had FOMO missing out on these best month’s returns, you likely also missed the dive. So will you or won’t you have FOMO if you invest more or less right now?

The honest answer is no one can guarantee the direction of the market in the short term and being overly ‘cute’ with your decisions to time the market could hurt you.

The best thing you can do is educate yourself and adhere to a simple plan. Throughout history, if you invest early and often, staggering your investments and moving towards your long term strategic goals, you don’t miss out on these sudden market corrections, and don’t need to worry about timing the market. That is a straightforward plan to avoid any of this FOMO mumbo jumbo for sho.

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