You may have had a friend tell you that a stock that they invested in has doubled in just one month. Or, you may have heard the news announce that the next big thing in the stock market is finally here. You may start to wonder, “Should I invest now or wait?” It’s difficult to ignore these attention-grabbing bits of information, and you can easily feel like you’re missing out. This feeling is called FOMO, or the Fear of Missing Out, and it plays a big role in how many people invest.
Smart investing is not about chasing the latest trend. It’s about thinking calmly and clearly, and following a plan based on your financial goals and risk appetite. Let’s understand how emotions like FOMO, hype, and noisy headlines can push people into poor investment decisions, and how you can stay focused.
What is FOMO in investing?
FOMO in the stock market happens when people invest because they feel others are making money and they are being left behind. It’s a very common feeling, especially when markets are rising or a particular stock is in the news.
Some signs that you might be feeling FOMO:
- You want to invest just because a stock is going up quickly.
- You hear friends or relatives talk about profits and feel jealous.
- You feel rushed or worried that you’re too late or lagging behind.
When FOMO takes over, people stop thinking clearly. They forget to ask basic questions like: Does this investment match my goals? Is the risk too high? Do I even understand this product?
This can lead to buying when prices are high and panic selling when prices fall. It creates a cycle of emotional investing, where your money potentially suffers.
Read Also: Investor Emotions & Market Cycles: A Behavioral Guide
How media and social pressure influence choices
A big reason people get caught in FOMO is the constant flow of news and updates. TV, newspapers, and social media talk about the stock market almost every single day. There’s always a new “hot tip” or a “top stock pick”. This kind of stock market hype makes it hard to stay calm. It creates pressure to act fast, before you “miss the chance”.
Media and social pressure affect investing choices in various ways.
- Headlines focus on excitement, not reality: You’ll rarely see news saying “invest slowly and steadily”. Fast profits make for better stories.
- Social media shows only the wins: People post about gains, but rarely about losses. This creates a false picture.
- Influencers may not be experts: Many give tips without knowing your situation. What worked for them may not necessarily work for you.
The next time you feel tempted by a headline or social media post, try pausing and asking yourself: Is this news helping me, or just making me anxious?
How to block out noise and stay focused
To avoid emotional investing, you can try building a simple plan and stick to it, no matter what others are doing.
- Know your goals: Are you investing for a house, retirement, or your child’s future? When your goal is clear, it’s easier to ignore the hype.
- Invest regularly: Use SIPs (Systematic Investment Plans) to invest a fixed amount every month. This eliminates the need to make a decision every time a stock or a fund is in the news.
- Follow a trusted source: Choose one or two reliable sources to learn from. Don’t take advice from too many places.
- Avoid checking prices daily: Constantly tracking the market can increase stress. Review your investments every few months, instead of every few hours.
- Write down your plan: When you feel tempted by a tip or trend, look at your plan. Gauge if the trend aligns with your plan, or if it’s just FOMO talking.
- Remind yourself of the basics: Potential wealth is built slowly. Long-term investing is what tends to create real potential results.
Blocking out the noise doesn’t mean ignoring the world. It means choosing what to listen to, and not letting your emotions drive your investment decisions.
Read Also: Behavioral Investing: Emotion vs Strategy in Markets
Conclusion
FOMO, stock market hype, and flashy news headlines are everywhere. They are thrilling, and therefore hard to ignore. But they can easily distract you from what can truly work for you. Quick reactions don’t generate quick and guaranteed results. What usually works is staying calm and consistent through the market ups and downs. Your investment plan shouldn’t be defined by fleeting trends, but instead by your personal goals and timeline.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.
The content herein has been prepared on the basis of publicly available information believed to be reliable. However, Bajaj Finserv Asset Management Ltd. does not guarantee the accuracy of such information, assure its completeness or warrant such information will not be changed. The tax information (if any) in this article is based on current laws and is subject to change. Please consult a tax professional or refer to the latest regulations for up-to-date information.
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