Image by Grok
About the Author
Josh Obsisian (Fictitious) is a practising psychologist in the financial sector, specialising in behavioural finance, group dynamics, and the psychology of market influence. With a clinical background and over a decade of experience working at the intersection of human cognition and capital markets.
Often compared—perhaps a touch flatteringly—to Wendy Rhoads of Billions, I try to bring a keen eye to the subconscious drivers behind investor sentiment, herd mentality, and market manipulation. I have recently become interested in identifying toxic narratives and personalities in trading communities, helping institutions and individuals remain anchored in clarity amid the chaos.
Monday 7th July 2025
How FOMO Affects Investment Decisions
You’ve felt it—that gnawing urge to jump into an investment because everyone else seems to be making a killing. Maybe it’s your neighbour banging on about their latest stock market win or the endless headlines about a property boom in London. FOMO (the fear of missing out) doesn’t just mess with your head; it can seriously mess with your wallet too.
In this article, we’ll unpack how FOMO can lead to three classic investing mistakes—and how to spot them before they sting. Don’t worry, we’ll keep it light, but by the end, you’ll know exactly what to watch out for.
Mistake 1: Buying High (Because Everyone Else Is)
Picture this: a UK tech stock is all over the news, and its price is rocketing. Your mates are piling in, and even your taxi driver’s giving you tips. The hype is real, and you don’t want to be the only one missing out. So, you buy in—at the peak. Then, like clockwork, the price tanks, and you’re left holding the bag. Sound familiar? Most of us have us have experienced it, I know I have.
Why it happens: FOMO makes you feel like you’re late to the party, so you rush in without checking if the party’s already over. It’s like jumping on the property ladder in London right after prices have skyrocketed—everyone’s talking about it, but the smart money’s already moved on.
Mistake 2: Selling Low (Because Panic Sets In)
Now, imagine the opposite. The market dips, and suddenly, everyone’s panicking. Your portfolio’s taken a hit, and all you hear is doom and gloom—whether it’s Brexit jitters or a global downturn. FOMO’s sneaky cousin, fear of further losses, kicks in. You sell everything in a panic, locking in your losses. A week later, the market bounces back, and you’re kicking yourself. You guessed it, I’ve experience that too.
Why it happens: FOMO isn’t just about missing gains—it’s also about fearing you’ll miss the chance to avoid bigger losses. It’s emotional, not logical. Think of the rush to sell off UK shares every time there’s a whisper of economic uncertainty. It’s like chucking your brolly at the first sign of rain—sometimes, it’s just a drizzle.
Mistake 3: Overtrading (Because You’re Chasing the Next Big Thing)
FOMO can turn you into a fidget spinner—constantly switching investments, trying to catch the next wave. One day it’s crypto, the next it’s green energy stocks, then it’s back to property. Each time, you’re racking up trading fees and stress, but your portfolio’s not growing. In fact, it’s probably shrinking.
Why it happens: FOMO makes you feel like there’s always something better out there. You’re chasing wins but missing the bigger picture. It’s like flipping between ISAs, trying to max out every tax break without a plan. Fun for a minute, but your bank balance won’t thank you.
A Cheeky Truth
Here’s the thing: FOMO turns investing into an emotional rollercoaster, and rollercoasters are fun at theme parks, not in your portfolio. The more you let FOMO steer your decisions, the more likely you are to make these mistakes. But don’t worry—you’re not alone. Even seasoned investors feel the pull. The trick is knowing when it’s FOMO talking and when it’s your rational brain.
Your Takeaway
Next time you’re tempted to buy, sell, or switch investments because of FOMO, ask yourself: “Am I doing this because it fits my plan, or because I’m scared of missing out?” If it’s the latter, take a breath, grab a cuppa, and revisit your strategy. Investing’s a marathon, not a sprint—don’t let FOMO trip you up.
Next: Part IV - Strategies to Overcome FOMO
Caveat Trader:
This isn’t advice, guidance, or a tip-off. It’s merely a peek behind the financial curtain. If you’re about to remortgage your nan’s bungalow based on this infographic—don’t. Consult a proper financial professional instead.