Are you missing out?
Growing up in Compton was fun in my opinion. My Grandmother was alive, my Mom was healthy, and majority of my family lived in a big (small) house.
It was great.
However being the youngest of two siblings, I often felt left out.
For instance, I remember being sick with chicken pox and being left in the house while everyone else went to the mall to go shopping.
When they returned, they didn’t have anything for me. However my Brother had a brand new pair of shoes.
All I can remember is that I felt like, how could they forget about me?
After all, I was just sick, not dead, and I needed new shoes as well.
As a kid, I had a lot of those experiences.
Both the sick and the left out ones.
The whole experience created a constant, fear of missing out, aka FOMO.
In my opinion, FOMO is just curiosity that is uncontrolled and irrational. That irrationality can be detrimental if you aren’t thinking straight.
I.e. being irrational.
With decision making, the most consistent success is achieved by those who can remain curious and rational in their approach.
This is what I aim to do with every aspect of my life.
Whether its medicine, surgery, investing, or parenting, I find that the worst decisions I can make have FOMO or irrationality at the genesis of them.
So, to be great, we need to make more rational decisions and less irrational ones.
If you follow me on Twitter (@fisurgi), you know I can be hard on index funds sometimes, but the reality is index funds are the rational decision for the overwhelming majority of people. Stock picking on the other hand can indeed be powered by FOMO and irrationality, majority of the time.
It takes experience and honest attempts to learn to know, when your investment decision is not being powered by FOMO.
And trust me, it’s not easy. I’ve succumbed to FOMO in the past and its not fun in hindsight.
Also, hindsight is the only way to truly know if you’ve fallen prey. It typically occurs, because you’ll see the market going up and up, and then find yourself justifying an investment that you would not make in a down market.
Don’t do this.
Know why you are investing and know what your approach will be…
And stick to it.
The truth is, we are human.
We aren’t computers.
It’s impossible to us to be 100% rational all the time. Although we try to keep our emotions in check, sometimes they guide our decisions.
To combat this, I’ve learned to put time between investments that I am considering.
Emotions over time, tend to fade. Thus if its a great idea, it will persistent, grow, and allow me to see the angles clearer. However if that idea is powered by emotions or FOMO, it theoretically won’t be long lasting and time will allow the euphoria to fade.
As we continue along our paths to creating generational wealth, we must understand that FOMO happens, but we must limit the number of times we act on it, if we want to be successful.