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In this episode of GDS Unplugged, we’re tackling one of the most subtle and potentially costly behaviors in investing: Market FOMO (Fear of Missing Out). It’s that urge to chase returns when markets are going up and to pull back when markets are sliding. But as Robert and Glen discuss, reacting to headlines and social buzz can lead investors away from thoughtful, goals-based decision-making.
Markets are noisy. Algorithms reward trends. But history suggests that long-term success is often associated with discipline, diversification, and sticking to a thoughtful plan, not chasing viral returns.
When people talk about “the market,” they’re often referring to the S&P 500 index—a group of 500 large U.S. companies that many view as a performance benchmark. But the S&P 500 represents only one segment of the full investment landscape. It does not include:
So if you’re comparing your diversified portfolio to only a large-cap stock index, you may not be measuring a fully relevant comparison. What often matters most is what your portfolio is designed to do for your goals, not how it compares to one particular index.
In 2022, the S&P 500 experienced one of its most challenging years in over a decade, followed by a notable rebound in 2023. While that recovery grabbed headlines, it also highlighted an important reality of investing: losses require larger gains just to get back to breakeven.
This is why reacting to short-term market moves or news-driven narratives may be so costly. Timing decisions based on fear or excitement often work against long-term success, especially when markets are at their most volatile.
Human psychology plays a huge role in investing behavior:
This emotional flip-flop goes against the idea of buying low and selling high. It’s one reason why markets may feel exciting on the way up, and discouraging on the way down.
Just like the duo discuss in the episode, the real challenge is not letting social buzz or short-term investment dictate your decisions.
A diversified portfolio is designed to help reduce concentration risk and may contribute to more consistent performance across different market environments.
Diversification does not guarantee profits or protect against loss, but it can help manage risk through market fluctuations.
In the episode, we break down how investors can seek to avoid common pitfalls associated with market FOMO:
Align investment decisions with your goals, timeline, and risk tolerance, not with yesterday’s headlines or last week’s subscriber count.
Social media and financial influencers often promote trends that look great in hindsight but may overlook risks and hidden assumptions.
Benchmarking to the “market” only makes sense if that benchmark is truly relevant to your investment strategy and objectives.
Broad portfolios that include different asset types can help you stay grounded, even when a particular sector or index is trending.
Investing isn’t a sprint; it’s a long journey that can include ups, downs, and sideways moves.
Market FOMO can be a silent portfolio killer because it plays on fear and greed, emotions that almost every investor experiences. One approach includes a plan built around your individual needs, a long-term perspective, and the discipline to stay the course through volatility.
Want a deeper conversation? Watch the full episode of GDS Unplugged: Market FOMO: The Silent Portfolio Killer (and How to Avoid It).
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GDS Wealth Management is an SEC-registered investment adviser. Registration does not imply a certain level of skill or training. This content is for general informational and educational purposes only and does not constitute investment advice or a recommendation. Investing involves risk, including possible loss of principal. For additional information about our services, fees, and disclosures, please visit www.gdswealth.com.