FOMO (Fear Of Missing Out) describes the anxiety investors feel when they see others profiting from a rising asset while they are not participating. It often leads to impulsive buying decisions.
Signs of FOMO-driven investing include buying at all-time highs, investing without research, following social media hype, taking on excessive risk, and ignoring fundamentals.
Dangers of FOMO include buying tops and selling bottoms, overallocation to risky assets, emotional decision-making, and falling for pump and dump schemes.
To avoid FOMO: Stick to your investment strategy, set clear entry and exit points, dollar-cost average instead of timing markets, and remember there will always be new opportunities.