Have you recently bought a meme stock or a cryptocurrency because you heard someone made a fortune on it? Or invested in something after hearing a friend bought it and did absolutely no research yourself? If yes, you are a victim of FOMO (fear of missing out) investing.
Phrases such as "Buy the f*cking dip," "Have fun staying poor," "Diamond Hands," and "OK boomer" have become commonplace. Gen Z and younger millennials don't want to invest in "boomer" stocks, they want to get rich quick and with the current state of the markets (meme stocks, cryptocurrencies, etc) they are basking in their something-for-nothing mentality.
FOMO investing has been fueled by the pandemic, where we had nothing better to do than sit at home, save or get stimulus money, and watch what other people are doing. Investing apps such as Robinhood (20 million users) exploded during the pandemic, and retail investors now make up 24% of US Equity trading volume, up from just 10% a decade ago.
Reddit, Twitter, TikTok and Discord channels are exploding with investment advice, and social media influencers are pumping new crypto schemes daily, and followers are dumping their savings so they don't miss out on the latest get-rich-quick coin or meme stock. (From Snoop Dogg to Lana Rhoades, everyone's pumping something these days)
Short Squeez Takeaway: Even if you are a sophisticated investor, it's hard to block out the noise when it's around you 24/7. It is tempting to imagine that one great investment could help you buy a house, buy a diamond ring for your significant other, or wipe out your entire student loan. It would be interesting to see how long FOMO investing can last though. Rise in interest rates and inflation could make boomer investments like bonds more attractive but we are willing to bet our entire Dogecoin portfolio that Gen Z investors would rather throw money into crypto scams before they even think about investing in treasury bonds.