Overcoming Investment FOMO

Fear of missing out (FOMO) is a natural human feeling. No one wants to miss a big event, or in investing, a big payout. Which makes us wonder:  Should I buy Twitter? Facebook? Google? Alibaba?  Are there others I should know about but am missing out on somehow?  How can I be sure to get in on the next big thing? Fortunately, there is a simple solution to investment FOMO.  You might call it NEMO – never missing out.  Here’s how.

Ultimate FOMO example
Apple stock has been the decade-long poster stock for FOMO.  Apple has gone straight up for 10 years. Few could foresee its meteoric rise from bottom-dwelling computer maker to the re-inventor of the phone and music industries.  You own Apple products, you love them, and you can’t wait to buy the company’s next and greatest device.  As an investor, you would have been richly rewarded if you had put even a small amount into Apple many years ago.

Indexing, the anti-FOMO vaccine
But wait.  You probably did. If you were indexing, chances are you did own Apple and have ridden it up nicely to its latest high (along with Google and other tech stars of the last decade).  That’s because indexes own many or all of the stocks in their designated asset class, and each stock grows in proportion to its success.  Apple is the largest cap stock in the US and in the world for a reason, and so indexers own it.  For example, having increased 39x in the last 10 years, it comprises almost 3 percent of the all US Stock Market ETF, symbol ‘VTI’. For owners of that index, it’s no FOMO, all NEMO.

Who’s next?
It’s natural to wonder what the next big thing is.  Is it Alibaba, the Chinese internet juggernaut, soon to debut on the New York Stock Exchange as the largest IPO ever?  Maybe.  No worry, you’ll soon own that, too, as it gets added to indexes.  If Alibaba wins, you win, too.  If Alibaba flops as a public company, well something else in your index portfolio will surge ahead.  Just like Facebook and Twitter have eclipsed Groupon (remember them?) and (name any other short-term tech disaster).

Getting from FOMO to NEMO and beyond
It sounds easy, this ‘winner’s win’ index strategy.  What’s not obvious and not easy is that indexing done properly is ‘all about you’.  FOMO and NEMO are interesting but they don’t get to the real heart of the matter, such as “how can I be sure I am doing the right thing”, “am I being smart with my money”, and “will my money be there for me”.  That’s where Osbon Capital, the family investment office, comes in.  We have checklists, questions, and examples of valued-added investing and lots of experience – for you – to get you past FOMO and many other things to come.

If there’s any FOMO in your life, let’s make sure it’s about career opportunities, family adventures and great vacations, not about investments.

John Osbon – josbon@osboncapital.com