FOMO + investing: a dangerous combination

Co-authored by Nate DeMeo

FOMO (fear of missing out) was officially added to the dictionary nearly a decade ago with the growth of social media. It’s defined as “fear of not being included in something (such as an interesting or enjoyable activity) that others are experiencing.”1

In less clinical terms, it’s the “wish I was doing that” feeling you get when you’re browsing Facebook and see the gorgeous pictures of a vacation in Greece your acquaintance is on or when you catch videos of a concert on Instagram where your friends have front-row seats and are having a blast.

We would argue that even prior to this catchy acronym being coined, the FOMO phenomenon existed for centuries prior and applies to situations well beyond social events. In fact, as financial advisors we see FOMO all the time when it comes to investing.

It’s that “hot” investment idea that everyone else seems to be making a fortune on that isn’t part of your investment portfolio. You used to hear about it in a conversation with your friend over drinks or on the golf course, but now you might be seeing it pop up on your social media newsfeed or even in the form of a meme.

Do you have investing FOMO?

The problem with FOMO and investing is that it can have dangerous consequences if you act on your emotions. With regular FOMO, you might be swayed into taking that dream vacation you’ve been putting off or buying ridiculously priced tickets to a concert. It might not be the best thing for your budget, but within reason it’s probably OK.

In recent years with the pandemic and fewer social outlets, more people have begun to play their hand at investing — or more like what we would call gambling in the hopes of hitting the jackpot. It took some time, but we now have the benefit of hindsight to be able to see how some of those FOMO investments have played out:


While there are now hundreds of cryptocurrencies in existence, the original cryptocurrency, Bitcoin, remains the most popular. Data from Google Trends shows that interest in the search term “bitcoin” has fluctuated over time,2 generally reflecting Bitcoin’s price changes, as the chart below shows.

FOMO + investing: a dangerous combinationIt makes sense that interest around an investment goes up as the price increases and people see the high returns the investment has made. However, this also increases the temptation to buy when the price (and FOMO) is at its highest and means you’ve already missed a large amount of the investment’s price appreciation.

Most recently, Bitcoin returns have suffered in 2022 as overall risk-off market sentiment has combined with news that other cryptocurrencies like Terra/Luna have collapsed and crypto lenders like Celsius have undergone bankruptcy proceedings, freezing client withdrawals. Relative to the -14.3% year-to-date decline of the MSCI ACWI Index (representing global stocks) the price of Bitcoin has experienced a -50.1% return year to date as of August 5.3

Meme stocks

Meme stocks are a phenomenon that first made an appearance in 2020 during the pandemic lockdowns. With fewer in-person social opportunities, investors (including many new investors who first opened accounts during the pandemic) turned instead to social media and the stock market, investing in companies that were talked about the most online.

Similar to Bitcoin, these stocks have also had challenging performance so far this year. As of August 5, meme stocks (as represented by the MEME ETF designed to track these companies) have experienced a -44.1% decline.4


Special Purpose Acquisition Companies (SPACs), otherwise known as “blank check” companies, are holding companies that look to acquire operating businesses to take public as an alternative to companies going public through the traditional IPO process. In 2020 and 2021, there was a large increase in SPAC issuance as celebrities like Shaquille O’Neil and Martha Stewart backed SPACs, raising the profile of these investment vehicles. Recently however, the SPAC market has slowed, and returns have suffered. SPAK, an ETF designed to track the performance of SPAC companies, has returned -30.8% year to date as of August 5.5

Below is a summary of year-to-date performance compared to global stocks (represented by the MSCI ACWI index).

FOMO + investing: a dangerous combinationOvercoming your FOMO

What do these FOMO investments have in common? Just as news and social media are immediately available at the tap of a finger, investors can get excited by investments that offer the potential to see results now.

Yet this thought process discounts one of the most powerful forces available to investors: time. Investors who harness time in the market allow their investments to grow and compound. It’s also important to maintain a diversified and disciplined approach, as this allows investors to avoid assets that have a brief moment in the sun only to ultimately come back down to earth.

Sometimes what you choose not to own is just as important as what you do. With stocks down 14% and bonds declining 9% so far this year, you may be feeling disappointed to see your portfolio down.6 Whether it is a hedge fund investment that has managed to avoid losses, a friend bragging to you about their well-timed (i.e., lucky) stock purchase or some other magic bullet investment idea that has you wondering if you need to change something up within your portfolio, we caution investors not to let FOMO overtake a well-researched, diversified, long-term investment plan that has proven its mettle through up and down markets over time.

If you’re concerned about the current market environment or investing FOMO, contact a Wipfli Financial advisor. We can help you put together a long-term investment plan that helps meet your needs and goals.


Related content:

A bear market survival tip
The unfortunate “gamification” of investing
Suggestions for keeping calm in uncertain times
A glass-half-empty market?

FOMO + investing: a dangerous combination

Wipfli Financial Advisors, LLC (“Wipfli Financial”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC); however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. Wipfli Financial is a proud affiliate of Wipfli LLP, a national accounting and consulting firm. Information pertaining to Wipfli Financial’s management, operations, services, fees and conflicts of interest is set forth in Wipfli Financial’s current Form ADV Part 2A brochure and Form CRS, copies of which are available from Wipfli Financial upon request at no cost or at Wipfli Financial does not provide tax, accounting or legal services. The views expressed by the author are the author’s alone and do not necessarily represent the views of Wipfli Financial or its affiliates. The information contained in any third-party resource cited herein is not owned or controlled by Wipfli Financial, and Wipfli Financial does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Wipfli Financial of the third party or any of its content or use of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner, investment advisor, attorney or other professional.
Rafia Hasan

CFA, CFP® | Principal, Chief Investment Officer

Rafia Hasan, CFA, CFP®, is the Principal and Chief Investment Officer for Wipfli Financial Advisors, based in Chicago, IL. Rafia leads Wipfli Financial's Investment Committee and has a deep knowledge of the financial markets, specifically in the areas of alternative investments and private equity. She also specializes in personal financial planning and estate planning for women investors.

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FOMO + investing: a dangerous combination

time to read: 4 min