This article is a website version of our weekly FREE Best Ideas Newsletter sent on 31.01.2023. Sign up here to get it in your inbox every Tuesday.
Last week I read another great post called FOMO: The Worst Financial Trait by Morgan Housel.
You might remember that I recommended his great book The Psychology of Money a while ago. Morgan doesn't give investment ideas but he's great to help you with your investment mindset.
In case you were wondering FOMO is the fear of missing out.
In the article Morgan wrote:
FOMO is recklessness masked as ambition. You see someone else getting rich and think, “If they can do it, I can too.” That feels like a good emotion – it feels like you’re learning through observation and following a data-driven path to success.
My FOMO problem and solution
My natural FOMO response is not that I want to run after top performing investments (although I was quite tempted by all those crypto billionaires) but want to run after the worst performing investments.
My thinking is, “Because it has performed badly it means that it must be undervalued and dirt cheap.”
Luckily, I did a lot of research and wrote a few articles about momentum. As you may know, the thing with momentum is that once something starts going in a certain direction at generally keeps on going.
Researchers have not been able to find out why it works, only that it does. I do not care, if it works, I use it.
So, I have changed my FOMO reaction to looking at companies that are undervalued but also have upward momentum. You may recognise this as the strategy we also follow in the newsletter.
What is your FOMO reaction?
What is your FOMO reaction?
Do you want to run after the hottest investments? Or are you more like me? Either way our natural reactions are BAD for us.
So, you MUST find a way to steer against your natural reaction.
How to fight FOMO
Once you have found your natural FOMO response you are half way there to fix it. All you have to do now is find a way to correct it.
I did a lot of research to control mine. How are you going to correct yours?
Here is something that I found works. It is what I did after all the research.
Write out your investment system
Write down your investment system.
This means write down exactly how you will:
- Look for it ideas
- How you will research them
- When you will buy
- When you will sell
- How are you going to keep your losses low
My system is the same as the one we follow for the newsletter.
To see how it works click on the following link, then scroll to the bottom to look at the two flow charts that show you exactly what and how we do it.
This is how we select ideas for the Quant Value investment newsletter
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Your anti-FOMO analyst wishing you profitable investing
PS I know markets are still uncertain BUT have you already started building your buy list? If not, why not sign up today and start now.
PPS It is so easy to forget and put things off why don’t you sign up right now?
