FOMOBOMO
Three things happened around the same time that got me thinking…
2x international best-selling author Morgan Housel posted that, “The most important financial skill is having no FOMO.”
The 100 Best Barbecue Restaurants in America author Johnny sent me this old George Carlin bit about how anyone who drives slower than you is an idiot, but anyone who drives faster is a maniac.
Holly (shoutout Gen Z!) sent me this TikTok (because who else would?) about oddly-specific, but hilarious, financial acronyms.
And what those three things together got me thinking was that actually it’s okay to have FOMO and that that phenomenon needed an oddly specific acronym. So without further ado I present FOMOBOMO (Fear of Missing Out but Okay Missing Out)...
FOMO is the dreaded feeling that everyone other than you is doing something and finding success as a result. In its worst form, it ends up being an emotional driver of bad decisions, particularly when it comes to financial ones. In recent times, for example, you can blame the booms and busts in everything from tech stocks to housing to NFTs on FOMO, and that would be fair. But if you believe that markets are mostly efficient, it’s also true that having no FOMO at all would be stupid.
Take the Carlin bit, for example. The person he’s mocking is a person with no FOMO: the faster driver is a maniac and the slower one an idiot, implying that the protagonist is 100% happy in her own shoes. Yet if you’re on the interstate trying to make good time without getting a ticket, the faster driver is the one you want to tuck in behind while the slower one maybe knows something you don’t. In other words, the speed you’re driving is clearly not the optimal one.
Now, that being said, it could be the case that driving faster might be too dangerous for you or that slowing down won’t get you where you need to go on time. And in both of those cases it means that you’ve recognized that what you are doing is different from what others are doing, that it is likely not correct, but that you’re okay with being wrong because of your unique circumstances.
That’s FOMOBOMO. Now let’s apply the concept to the financial world...
One of the more heartening things I read recently was that “More Americans Than Ever Own Stocks.” Is it a coincidence that that’s the case at a time when the stock market is at an all-time high? Of course not! Why? FOMO.
Now, is it the case that many of these new investors will lose money in the near term when stocks inevitably correct? Yes. But is it also the case that these new investors will be better off in the long run by owning equities? Also yes. And it’s FOMO that started them on this path. Here’s the experience of one 20-something Nick Luczak:
[During the pandemic] Luczak and his fraternity brothers started a group chat to discuss markets and stock picks. He said he made a profit investing in Amazon.com and watched his friends make, then lose, thousands of dollars trading meme stocks such as GameStop and AMC Entertainment Holdings. At one point, he considered becoming a day trader.
Now, Luczak, 24 years old, is focused on long-term investing. A salesman in Dallas, he is studying to become a certified financial planner.
See, in a mostly efficient world, FOMO is what opens our eyes to opportunities we might be missing, and we all have to start somewhere. So have it. And have a lot of it!
But it’s also true that even in a mostly efficient world not all opportunities are appropriate or appropriate for you. So don’t dismiss anything out of hand, but also if after carefully considering someone else’s idea and deciding it’s not appropriate or appropriate for you (even if a lot of someone-elses have the same idea), resolve to not let their outcomes convince you otherwise.
That, to put an oddly-specific acronym on it, is FOMOBOMO.
-Tim