Are american stocks fueled by FOMO effect?

US stock market

You might have experienced it, too. As you worry not to miss the opportunity to buy, you purchase stocks no matter what. The effect is called FOMO – Fear of Missing out

The U.S. are considering reopening its economy, which was strongly affected by anti-pandemic measures. Yet, Wall Street investors seem to have recovered from stock and in recent weeks have been buying shares without any fear. Since the end of March, when the value of Dow Jones index was slightly above 18,500 points, its value grew in 30%. Even though it still appears one fifth under its February record-high values, the progress is worth mentioning.

The massive monetary policies released by the Fed are usually mentioned as a reason for the stock rally. Yet, some analysts wonder whether investors aren’t affected by FOMO effect. The Fear of Missing out effect causes investor’s fear of missing either selling or buying opportunity of assets.

As Wall Street dropped in tens of percents due to lockdown measures only in few days, now it’s mostly the fear of missing a suitable buying opportunity. As Dow Jones and other indexes slowly approach pre-crisis values, their growth rate should slow down. The upcoming weeks will tell us more.


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