Where does the feeling come from?
When you see people around you gaining from something while you are outside, you feel two things at once: regret that you did not get in early, and fear that the chance will disappear entirely. Together those feelings push you to act fast, without asking the questions you would ask if the stock were quiet.
The catch is that talk about a stock usually grows after the price has already moved, not before. So the moment the feeling is strongest often comes after a large part of the rise.
In numbers
This does not mean every rising stock will fall back. It may keep rising, or it may not. The point is that a decision whose only reason is "I am afraid of missing it" has no plan behind it: you do not know why you got in, or what you will do if the price drops.
Three questions before you press buy
- Would I buy it if nobody were talking about it?If the answer is no, the talk is the reason, not the stock.
- What do I know about this company?Open its disclosures and news. If you cannot find a clear reason for the rise, that is information in itself.
- If it drops tomorrow, what will I do?If you have no answer before buying, you will be searching for one later under stress.
Watch it instead of chasing it
Instead of deciding in a moment of excitement, add the stock to your watchlist or set an alert at a price you chose calmly. That gives you time to think.
Check yourself
1. When does talk about a stock usually grow?
2. You bought at 6.50 and the price is now 5.80. Roughly how much are you down?
Summary
- FOMO is regret and fear together, pushing you to buy fast and without a plan.
- The feeling is usually strongest after much of the rise, not before it.
- Ask: would I buy it if nobody were talking? And what will I do if it drops?