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xrpzilla

The Sway of Excitement

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Investors are people, not robots, and people can be swayed by emotions like fear or excitement. And in the investing world, that can be a big problem.

 

Markets are moved by a range of factors, the strongest being emotion. There are two types of emotional reactions the average investor can experience. One emotional response is FOMO, or rather a fear of missing out on making money. Our community knows this acronym all too personally, as it is one filled with hope & the sway of excitement.

The other emotional response doesn’t get discussed as much, but it's just as important: Fear of losing everything (FOLE).

 

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While investors do not want to be left out, a more powerful emotion comes from the fear that they will lose all of their investment. When market volatility causes large swings in the stock market, people can become unnerved, causing them to sideline their investments to avoid a big sell-off or stock market crash.

This behavior was most notable in the wake of the 2008 financial crisis. 

Investors pulled their money out of the stock market as a reaction to the market sell-off, only to subsequently miss out on recouping losses in the dramatic recovery.”

 

Let us not unite with the latter element of fear, but to the former element of hope & excitement.

 

(This post has been inspired by an article written by Patrick Healey, www.kiplinger.com/article/investing/T031-C032-S014-psychology-of-stock-market-and-investment-decision.html)

 

Question:

If you had to re-brand the acronym F.O.M.O. with a positive connotation, for what would its letters stand?

Edited by xrpzilla
Adding a question and fixing my grammar.

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