The Fear of Missing Out

The fear of missing out (FOMO) is a powerful narcotic that often affects market participants near the top of a cycle.  And before long, you hear the “bag-boy” at the supermarket bragging about his “portfolio”.  When that happens it is time to follow Warren Buffet’s sage advice and “Be fearful when everyone else is greedy and greedy when everyone else is fearful.” ~Tim McMahon, editor

“Everybody’s Getting Rich (and Having Fun) Except Me”

By Elliott Wave International

Photo by Brooke Cagle on Unsplash

Hardly anyone wants to miss the party — whether on Wall Street or elsewhere.

Thus, the acronym FOMO — which stands for the “fear of missing out” — is in vogue. After a 12-years long bull market, the acronym has appeared in many financial articles.

Yet, the acronym was coined years before the current bull market.

As the March 2019 Elliott Wave Financial Forecast, a monthly publication which provides analysis of major U.S. financial markets, noted:

The “fear of missing out” and its abbreviation were coined by Dr. Dan Herman. … It was first published in The Journal of Brand Management in 2000, coincident with the front edge of the Great Peaking Process. … After more than 200 years of rising stock prices, not being in the stock market literally generates fear in many people. The underlying cultural dynamic is also appropriate as it coincides perfectly with the long-term peak in social mood.

Social mood also governs attitudes and behaviors in society at large, including social life.

As a June 7 New York magazine article says:

The city runs on FOMO, a connoisseurship of opportunities and possibilities; the catechism of “Did you get invited, are you on the list, can you get a table?”; the performance of plans.

So, the “fear of missing” out on rising stock prices goes hand-in-hand with the “fear of missing out” on a fun social life. The desire to “see and be seen” and “live it up” is especially pronounced during times of an exceptionally positive social mood (think the Roaring ’20s).

So, social mood is all-encompassing. And, returning to the financial aspects, here’s the latest on that front from Marketwatch (May 25):

[The] FOMO ETF [started] trading on the Cboe Options Exchange on [May 25], providing the market with a new tool for leveraging the retail trading boom by investing in all the buzziest “meme stocks” and funds from special-purpose acquisition corporations … to crypto-adjacent investments.

Right now, hardly anyone appears to be contemplating the total opposite of FOMO — which one of Elliott Wave International’s analysts said is the acronym FOBI. It stands for the “fear of being in.”

In other words, when social mood shifts from positive to negative (ushering in the next bear market), expect the “fear of being in” to replace the “fear of missing out.”

Remember, at the end of the 1920s, the stock market crashed. Social life — which had been characterized by vibrancy — was soon covered by a heavy blanket of gloom. The Wave Principle suggests that the next financial and social shift might be even more dramatic.

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