Do You Have FOMO Disease?
Do You Have FOMO Disease?
We know several people that suffer from FOMO. The disease comes with high anxiety, restlessness, and it occurs mostly in men. No, we’re not talking about a strange new virus.
We’re talking about an investment malady that stands for Fear Of Missing Out. Yes, after we’ve had a good year in the financial markets, many investors want to jump on the train—any train—to ride along with the gains. Unfortunately, they often forget about the quality of their desired investments.
Tech stocks drove the S&P index of 500 stocks up 23% in 2024, a wonderful year. Historically, stocks bounce around. For instance, in 2022, they dropped 22%. But all these ups and downs over many years work out to an annual average of about 10%, including dividend income paid. At that rate of growth, values can double in about eight years. Wow!
The moral of the story: Stick to quality. Yes, Bitcoin has screamed up since the election, but does anyone really understand it? Tesla has jumped up 69% since the election, but their auto sales actually declined in 2024 from 2023. True Yes.
In other words, the cure for FOMO is not poor-quality investment fads. At our firm, we agree with the philosophy of Warren Buffett: If you don’t feel comfortable with the thought of owning a particular investment for 10 years, don’t own it for 10 minutes. And you shouldn’t either.
Believe it or not, for those investors that came in late to the markets in 2024 they have actually seen negative returns. During that time interest rates climbed, and investors got a little nervous with the thought that if consumers have higher interest rates they’ll buy less and slow down the economy. Don’t fret!
Here’s the good news for 2025: There’s lots of opportunities if we stick with quality investments. Consider these ideas: Interest rates on many stable interest-paying securities such as bonds still pay very good yields. And corporate stocks and stock funds in certain sectors, including technology and healthcare, are projected to have corporate growth at a very healthy 20%. And don’t forget utility companies that are expanding to keep up with energy demand. Growing profits drive growing stock prices.
Even after the good year that we had in ’24, our firm does not waiver from stability and quality, even as we look for bargains to benefit our clients.
Happy New Year! And be sure not to catch FOMO. As always, we love to hear our readers’ reactions.
The Dougherty Investment Advisors Team
Past Performance Does Not Guarantee Future Results. Consult with an advisor regarding your situation.