Nanayam Vikatan – 29 January 2023 – Two types of mental mistakes that affect investment! | fomo – fear of missing out for investment

Nanayam Vikatan – 29 January 2023 – Two types of mental mistakes that affect investment!  |  fomo – fear of missing out for investment

Fomo in the investment market…

This FOMO has many effects on the investment markets as well. FOMO is the reason we rush into investments that we don’t know or understand. It’s common for someone on Instagram to brag about seeing 6% gains in the stock market every day. When we look at it, we see that without realizing it, low thoughts about the investments we have made so far and questions about whether our investment method is correct arise in our minds;

We tend to invest in people we consider successful. This fomo can fuel our appetites and make investments like the stock market, which are already on the rise, go even higher. This is what we saw in 2020 and 2021.

Fear of losing…

But FOLO (Fear Of Losing Out) gives the opposite feeling when inflation increases. Perhaps the follo is that the fear of what will happen to our investments if the stock market falls prevails and prompts us to sell even good stocks.

Just as FOMO causes the market to go too high, FOLLOW accelerates the market decline. When we know that many people sell when the market goes down, we also rush to get out of that investment.

How to avoid it?

A good stock market investor avoids both of these as it is good for his investments, so let’s see how to avoid them.

* It is better to ignore the market noise. Starting with family, the market noise that reaches us in many forms – friends, market experts, TV shows, investment websites – leads to FOMO and FOLLOW. Whatever investment ideas are presented, it is better to act after a decisive research whether they are suitable for our nature and whether now is the right time to buy / sell.

* It is necessary to feel the mistakes of the mind. Psychologists list 21 types of mental biases that do not affect even the most confident investors. Feelings like fomo, follo, and ‘Confirmation Bias’ come from the influence of mental errors. A person with ‘confirmation bias’ will only read news that is favorable to his opinion. He doesn’t even watch the news he doesn’t like. Thus the decisions taken by him become biased and there is a possibility of going wrong.

For example, if he decides that the market is going up, he will read only the news that confirms it and buy even the stocks that are selling at higher valuations. If he gets the impression that the market is going down, he will read only the related news and sell the good stocks in a hurry.

When we realize that these emotions are influencing our minds and investments, and we begin to consider each of our decisions from a new perspective, their influence begins to diminish.


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