Is your fear of missing out hurting your returns?
If you demand a margin of safety, you're bound to miss a few big winners. [Bonus Video: Dan Ariely discusses FOMO] You can miss out on hundreds of investing opportunities and still do well – but if you back too many duds, you’re sure to do poorly. Yet in 2007, a Stanford University study found that what we fear most in investing isn’t the risk of loss, but the risk that we do worse than everyone else. We don’t fear being poor nearly as much as we fear being poor when those around us are rich – and that causes some very risky behaviour. First, it means we’re particularly attracted to ‘lottery ticket’ stocks – pioneering biotechs, speculative miners, or ‘the next Apple’. We all love a good story, but as everyone gets on the bandwagon, prices rise and the stocks very often become overvalued. Read full article here: (VIEW LINK)
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