Fear of Loss or FOMO
If you have followed my posts for any length of time you would realize that I am not a big fan of the stock market.
Today I will talk about the fear of loss, and the Fear Of Missing Out (FOMO).
While we do have about 15% of our net worth tied up in the stock market that also means 85% of our investments are NOT tied to the stock market.
But if you have the bulk of your investments in the stock market, then this post is for you.
With the current volatility of the market; inflation we’ve not seen for decades; and turmoil in the world, you might sell off what you have and move to cash out of fear of additional losses.
I love how Warren Buffet describes the stock market as an alcoholic, bipolar uncle.
As more investors sell it influences more investors to sell and creates a downward spiral in the market that can play out over weeks, months, and even years.
An experienced, astute investor will ask themselves the question, “Is this behavior wise?”
As an example, if an investor missed out on just five days, which happened to be the best five trading days between January 1, 1980 and December 31, 2018, he/she would have a portfolio that is 35% less than someone who stayed in the market the whole time.
If you purchased cryptocurrencies because people around you were doing it, bragging about their profits, and you had a fear of missing out, you probably have half of what you invested.
The point is to determine what the best investment class is for yourself and don’t worry about what others are doing.
The bulk of our wealth is in Real Estate in a market that has a disdain for property owners. We still profit handsomely because we know how to navigate the landscape. While many landlords suffered, 100% of our tenants paid 100% of their rent through the entire pandemic.
Be aware if you are being motivated by either a fear of loss or a fear of missing out.
To Your Prosperity,
Rennie
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