Ever Make a Bad Decision Rooted in Fear?
Clearly, you are not alone!
I bet the families that paid kickbacks to illicitly get their kids into Ivy League schools might now believe they did. Or maybe the teenager that went along with the crowd to fit in — at the expense of their own values or safety.
How about Sam Bankman-Fried’s investors? This group might be rethinking their decision at this point also. These choices are rarely made with bad intent – even if you have to dig a little to find the hope or good intent. They do share one thing in common, however.
The decision makers all shared in the “Fear of Missing Out” commonly known as FOMO. It’s not new, it’s not going away, and none of us are immune.
In most cases, our reactions to FOMO are emotional, not well thought out or researched, and often impulsive. A quick look at Reddit and meme stocks, or the digital transaction (currency) technologies confirm this. With returns of 4000% many months, heck, it’s hard not to look twice. This “keeping up with the Joneses” mentality has found its way into most peoples lives in one form or another.
On the other end of the spectrum, we also readily entertain pundits that predict apocalypse in a variety of forms. They are selling fear that something horrible is about to happen and that “this time is different.” With respect to investing and wealth management, “the bottom is about to fall out” has been predicted ever since investing began.
The irony of these two extremes is comical. Some of the most FOMO driven, speculative investments are just one tweet away from their own apocalypse!
To be fair, there is a place to take an offensive position and take a chance on investing in the “great new thing.” Likewise, there is a place to take a defensive position by limiting these somewhat-gambles to small percentages of a diversified, balanced-for-you portfolio(s). And there’s the key – investing that you can count on is boring. It’s not gambling. It’s not emotional. It’s not impulsive. It is systematic, disciplined and understood.
We encourage you not to be too enticed by the stock-that-just-can’t-fail or the doomsday pundits. We have been fortunate to have had a very long climb up-and-to-the right. And while there are currently, and still will be some dips in that trend-line, a steady, disciplined, diversified portfolio – adjusted to your risk tolerance, time horizon and goals will be your best guide. Don’t fear being boring – it pays off.