#FOMO #Beomgaek
weekly.donga.com/economy/artic...
"I'm angry that the stock market is rising."
Quite a few stock investors have recently complained like this. The Korean stock market is experiencing a bull market hotter than the Gangnam real estate market in Seoul or the NASDAQ in the US. So, are many people enjoying huge profits and happiness? The reality is closer to the opposite. By 2026, "FOMO" syndrome will be rampant in the stock market, and indeed, throughout South Korea.
Even if you're investing well, you're plagued by anxiety and pressure, thinking, "I'm missing out on something right now" and "I need to make a life-changing profit from this unprecedented bull market." In this situation, no matter how much you earn, you're bound to feel unsatisfied or at ease.
How does our brain react when we hear a friend's success story: "I made a fortune with SK Hynix stock and moved to a prestigious area?" The reward circuit in the mesolimbic system, dopamine, is stimulated, causing us to experience both discomfort and anxiety. Simply put, it's experiencing an intense desire for success and envy, coupled with feelings of inferiority and anxiety, wondering, "Why haven't I been able to make such successful investments?"
The result is gambling-like investments. Many people resort to excessive leverage, "debt investing," or "zero-grip investing," proclaiming, "I'm going to gamble on this bull market." Investments that lack risk management and resilience are akin to gambling. The individual unconsciously recognizes this, which is why they often use the term "gamble." FOMO investing leads to emotional choices rather than rational analysis.
The logic goes, "If everyone else made 100 million won, but I only made 10 million won, that means I lost 90 million won." This cognitive error breeds feelings of jealousy, discomfort, and self-blame. Furthermore, dopamine signals, "Invest immediately to avoid becoming broke." This ultimately leads to unplanned, mindless trading or "follow-the-money" trading. This is what happens in our brains when FOMO syndrome is severe.
FOMO syndrome prevents us from making long-term investments. Those who earned 30 million won in investment returns over the past year are encouraged to reach 100 million won, and those who earned 100 million won are encouraged to reach 300 million won.
This is done with complete disregard for indicators like performance, book value per share (BPS), and price-to-earnings ratio (PER).
This type of short-term trading resembles adult ADHD (Attention Deficit Hyperactivity Disorder). It's because, with a lack of focus, anxiety fuels excessive impulsive behavior. What happens when we constantly compare ourselves to others and overwork our brains with self-blame and feelings of inferiority? Our brains can become chronically idle, leading to a lack of focus.
A paper titled "Global FOMO: The pulse of financial markets worldwide" found that a 10% increase in the FOMO index tends to decrease monthly stock returns by an average of 1.7-2.0%.
Perhaps FOMO syndrome is a human instinct, and there's no way to completely overcome it. Even those who seem to be successful investors experience anxiety and worry.
① Develop a principle-based investment strategy
② Use objective indicators, not emotions
③ Change how you consume information
④ Establish a self-assessment routine
