FFOMO is a popular term in cryptocurrency and Meme stock investing. It means we are making an irrational decisions to trade in some investments without conducting due diligence. Bitcoin, for example, has experienced cumulative growth of more than 60,000%. FFOMO creates the zeal to discover another such surge, fired by the medial news of how much money was made by early investors.
FFOMO reflects our natural desire to maximize gains and a worried feeling that you may miss that opportunity. While the term is often used in social contexts, FOMO is extremely prevalent when it comes to our investment. Oftentimes, we just don’t realize it.
The source of FFOMO come in many different forms, but it often starts with a what-if question in our mind. For example, you have bought a stock for $40 and it has jumped to $44. That is 10% gain in a few days. You are thinking about cashing the gain. But what if you sell your stock and the price immediately increases afterwards? This prevents you from selling the stock to realize the gain. Consequently, you just wait and see. How many times you have seen the stock go south and regret for not selling it. Then you determine that you would sell it when it moves up again. But next time you face the same what-if question. Sounds familiar?
You face the same issue when you try to buy a stock or a house after its price has moved up. The FFOMO prompts you to ask “What if I invest in this stock or buy this house and then some shock changes the course?” You hesitate and again put yourself in the mode of wait and see. Unfortunately, by the time we make up our mind, it is too late after the Main Street gets wind of these trends. Whether it’s actually losing out or just the thought of a transaction not going your way– FFOMO plays an important role when we ask ourselves the hypothetical “what-if” question.
The main cause of FFOMO is often comparison and the desire to be part of the gain or fear of missing out of the opportunity. It can affect the quality of human lives let alone financial loss. How can we break out of FFOMO? The best way to deal with FFOMO is to become educated about the markets, take the time to research, and understand that sticking to a long-term investment strategy rather than seeking short-term quick gains is the best strategy. You need self-discipline in addition to Financial Intelligence to achieve the long-term financial success.