We all want a piece of the action, and we hate to think we’ll miss it. Millennials have this feeling down to a text-messaging abbreviation: “FOMO,” or “fear of missing out.” Of course, being worried that you’re not a part of the next big thing isn’t limited to this younger generation; people, and particularly investors, often share this feeling.
Think about momentum stocks – the wildest of which can go from $30 to $300 seemingly overnight – and you see what I mean. In retrospect, when any stock shoots ahead like this, investors tend to agonize that they should have foreseen this unexpected, exponential growth.
Maybe here “FOMO” should stand for “fear of missing an opportunity.” And in the case of momentum stocks, we’re talking about a lucrative opportunity, to say the least.
But is it realistic to lament not getting on the next hot stock? Should we (or could we) have known better? My answer is no way, no how. So stop beating yourself up.
Let’s start with the good bad news. I guarantee you you’ve missed a stock. Every single investor has. Hindsight is 20/20 for those situations. And what you really want to know what you can do now, when you realize the stock you could have purchased for $30 is closing at $300.
I know it’s tempting to buy in when you look at a momentum stock that seems to be on fire. I feel the same way when I look at an opportunity that I feel I missed. It’s frustrating. I feel you.
But I believe that unless I’m an early adopter, it’s too late to make substantial money by jumping on a crowded trade. To me, that never works out the way we plan. So I don’t do it.
Honestly, unless you’re a founder of one of these runaway stocks, or were perhaps buddies with Bill Gates back in 1976, you shouldn’t keep yourself awake at night for not getting rich overnight. The only people who ever really get rich in investing are those who patiently adhere to the marathon approach to wealth growth. Take comfort in the fact that you own other great franchises, and in the knowledge that investing is a long, slow game.
You don’t have to go it alone. Consider working with someone to help manage your portfolio and your sometimes fearful, nervous, or greedy feelings. Working with a financial advisor can be a good way to insulate a portfolio from the whipsaw of emotion. A good advisor not only works to understand a client’s goals and risk tolerance, he talks investors though palpable, emotional moments. In the end, clients tend to make rational, rather than emotional, investment decisions.
Cool, calm, collected, and confident – it’s where we all want to be when managing our financial future. Oh, and generating growth and wealth, too. Evidence shows that partnering with the right advisor can result in a notable improvement in return. From research on the topic, there is a quantifiable increase in return when an investor works with a financial advisor, called the Advisor’s Alpha. When certain best practices are followed, the result can be an Alpha in the 3% per year range.
It may take some time to get where you a want to be financially, but settle in for the long haul, and rest assured you’ll get there.