Lori Schock, the Director of the SEC’s Office of Investor Education and Advocacy, recently published an article titled “Say ‘NO GO to FOMO,'” in which she says, “one place you should consider using your strongest willpower is when you’re making decisions on investment opportunities.” In this piece, Schock discusses the phenomenon of FOMO (Fear of Missing Out) and its impact on investment decisions, particularly in the volatile world of cryptocurrencies.
Schock begins by acknowledging the allure of digital assets, including cryptocurrencies, ICOs (Initial Coin Offerings), meme stocks, and NFTs (non-fungible tokens). She says these investment types have seen a surge in popularity, driven by their potential for high returns and widespread promotion by influencers and social media. However, Schock warns of the dangers of making investment decisions based on FOMO, especially in the highly speculative and often unpredictable crypto market.
Highlighting the inherent risks and volatility of cryptocurrencies, Schock advises investors to be cautious. The crypto market is known for its dramatic swings, with investments that can experience significant highs and lows. She emphasizes the importance of not being swayed by the fear of missing out on trendy investments, as this can lead to hasty and ill-informed decisions.
Schock recommends diversifying investment portfolios to include a mix of assets such as stocks, bonds, and cash, in addition to cryptocurrencies. She argues that this diversification strategy helps mitigate risk and reduce the impact of market volatility on overall investments. She also stresses the importance of diversifying within asset classes to avoid over-concentration in any single investment.
The article underscores the significance of having a long-term financial plan, including paying off high-interest debt and understanding the power of compound interest. Schock encourages investors to start saving early to maximize the benefits of compounding.
Schock advises taking full advantage of employer-sponsored 401(k) plans, especially those with employer-matching contributions. She highlights this as an opportunity for assured returns, a rarity in the speculative world of cryptocurrencies.
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