From GameStop to Dogecoin, FOMO drives the markets but can play havoc with your earnings. Here’s how to keep a cool head during those wild market swings.
5 min read
Markets thrive on stories of big wins: Bitcoin’s meteoric rise, NVIDIA’s unstoppable rally, or that one Insta investor who turned pocket change into a fortune overnight. These tales spark our imaginations but also trigger something else — fear of missing out. FOMO isn’t just an occasional itch. It’s a force that has shaped some of the biggest investment frenzies in history. From dot-com bubbles to meme-stock madness, the same pattern emerges on a loop. But why does FOMO hit us so hard, and how can we avoid its costly traps?
Bubble trouble — when markets run on fear
Investment FOMO has left its mark on markets for decades, shaping some of financial history's most dramatic booms and busts. In the 1960s and ’70s, the so-called Nifty Fifty stocks — giants like IBM and Coca-Cola — were considered bulletproof investments. This belief sent their valuations soaring, only for the bubble to burst in the mid ’70s, leaving overconfident investors to grapple with heavy losses. Fast forward to the dot-com boom of the 1990s, and history repeats itself. Internet startups with little substance but plenty of hype saw their stock prices skyrocket. When the inevitable crash came in 2000, trillions of dollars evaporated, leaving latecomers holding the remnants of exaggerated promises.More recently, the GameStop frenzy of 2021 was a modern-day masterclass in FOMO-fueled investing. What started as a niche movement on Reddit turned into a global phenomenon, with retail investors bidding up the GameStop stock price in an attempt to challenge hedge funds. While early adopters celebrated massive returns, those who joined the surge at its peak watched their investments unravel as the stock price plummeted. Cryptocurrency has followed similar patterns, but at warp speed. Dogecoin, for instance, soared in value before Elon Musk’s much-hyped Saturday Night Live appearance in 2021, only to crash immediately after. It later surged again, crossing $24 billion in market cap, spurred by renewed attention following Trump’s re-election. The volatility is dizzying and underscores how quickly hype can morph into regret.
Why FOMO hits harder with investments
With Bitcoin smashing past the $100,000 mark and NVIDIA’s stock skyrocketing, it can be hard not to feel a pang of regret, a sense that you’ve missed your ticket to financial freedom. That’s FOMO, the Fear of Missing Out, at work. In investing, FOMO shows up as the urge to jump on the latest stock or crypto trend, fueled by fear and urgency rather than calm, careful consideration.Investment FOMO consists of two things: herd mentality and scarcity mindset. Herd mentality tells us that “everyone’s buying, so it must be a smart move.” This collective excitement can override logical thinking, encouraging investors to follow the crowd without fully checking the facts. Meanwhile, a scarcity mindset warns, “opportunities like this don’t come often!” It emphasizes the fleeting nature of the moment, causing us to overvalue rarity rather than objectively assess risks and rewards. Even seasoned investors can fall into classic traps: acting on limited information, buying high and selling low, or risking more than they can afford, all fueled by viral success stories of “overnight” millionaires.Ultimately, FOMO isn’t just the fear of losing money — it’s also the fear of being left out of something big. But as exciting as Bitcoin’s latest milestone or NVIDIA’s rally may seem, letting FOMO guide your investments can lead to chasing highs and missing out on the real rewards of long-term financial success.
Investments made easy
With N26, you can buy stocks and ETFs without leaving your banking app. Get started from as little as €1.
Investing can feel like a pressure cooker of “act now or miss out!” moments. But the good news is that FOMO doesn’t have to drive your decisions. With a strategy and some perspective, you can regain control and invest with confidence. Here’s how:
1. Think big (and long-term)
When you zoom out and see the bigger picture, FOMO can start to fade. Investing doesn’t have to be about seizing every opportunity — it could also focus on building a future over decades. This helps buffer you against the inevitable short-term ups and downs of the market.
2. Filter your sources
Be cautious about where your advice comes from. Social media, WhatsApp chats, or “hot tips” are often biased or lack proper context. Success stories on these platforms can lead to irrational trading frenzies, especially in volatile spaces like cryptocurrency.
3. Stick to a plan
A well-thought-out investment plan can be an anchor in turbulent times. Map out your goals, risk tolerance, and time horizon, and let these guide your decisions, not the latest viral stock. Think of it as your financial North Star: It’s there to keep you steady no matter what the markets are doing.
4. Diversify, diversify, diversify
The phrase “don’t put all your eggs in one basket” exists for a reason. A diversified portfolio comprising a mix of different asset classes like ETFs or bonds is a great way to embrace this mindset. A more diversified portfolio can help cushion you from market swings, ensuring no single misstep derails your progress.
5. Automate for peace of mind
Set up automatic contributions to your cornerstone investments, like retirement accounts or ETFs. This “set it and forget it” approach takes emotion out of the equation while keeping you consistent and disciplined.
6. Educate yourself (but don’t go overboard)
Knowledge really is power. By understanding the basics of finance, you can spot FOMO-driven traps like get-rich-quick schemes and stick to choices that align with your goals. But don’t drown yourself in research. Spending hours analyzing every market trend can lead to “analysis paralysis,” leaving you stuck in inaction.
7. Limit portfolio peeking
Constantly checking your portfolio is like watching water boil — it only makes you impatient. Schedule regular check-ins instead to avoid overreacting to short-term changes.
8. Hit pause before you act
FOMO thrives on urgency, so give yourself a cooling-off period before making big investment moves. Take 24 hours to research, reflect, and talk to someone you trust. Often, that extra time is enough to see things more clearly.
Stay ahead of investment FOMO with N26
Skip the FOMO-fueled rollercoaster with N26, where investing becomes seamless, transparent, and tailored to your pace. From global ETFs to crypto, you can start growing and diversifying your portfolio in just a few taps. Plus, the N26 app keeps you focused with real-time insights and tools to invest steadily without getting caught up in short-term noise. Ready to replace FOMO with confidence? It’s time to invest the smart way with N26.
From tight election races to changing interest rates, the world can be pretty unpredictable — and uncertainty causes volatility in the stock market. Learn how from finance professional Kevin D. Flynn.
From tight election races to changing interest rates, the world can be pretty unpredictable — and uncertainty causes volatility in the stock market. Learn how from finance professional Kevin D. Flynn.
