Be Ready for the Markets’ Next Big Thing
(Don’t worry, there ALWAYS is one)
BY ANDREA BEREZNAK
Investing & FOMO
With the pandemic in retreat and economies re-opening, the financial markets have zoomed back past peak levels. Recently specific asset classes have been rocketed by animal spirits and investor excitement.
I am not here to paint a doomsday picture. In fact, I am quite optimistic about continued macroeconomic recovery and overall financial market prospects for the next 24 months. What I am here to offer is a little context and rationality.
FOMO- Fear Of Missing Out
Two years ago, most of us were struggling to understand what crypto currencies and block-chain technology were. Today, if you aren’t invested in multiple crypto currencies, piling into the Coinbase IPO, or investigating how to install your own bedroom crypto mining setup, you likely feel almost antiquated. The media headlines, social media posts, and sub-Reddit forums have a powerful ability to promote FOMO (fear of missing out). As social creatures we have an innate desire to belong, be part of the group, and agree with others.
Beware herd mentality though..
Sometimes when the larger group is all moving one direction it is the wrong one. There is even a segment of technical analysis in finance that proports investors should eschew the movements of retail (aka individual) investors, as the investment in question is likely to soon move in the opposite direction.
Think, Bigger Picture
As you watch crypto values bungee up and down with sweaty palms, don’t panic that you are missing the boat. Stop… take a deep breath, bring back to mind your personal financial goals, the things that mean the most to you in your life that require money, both short term and long term. Now consider where you are in your unique financial path.
Is a big purchase of a risky, volatile investment the best choice to move you toward that goal?
- If you don’t have 3-6 months of expenses saved for an emergency, you’re better off diligently socking money into a good old bank savings account. You need that money to be there if something unexpected occurs. Do not leave your immediate well-being to chance.
- If you are working on paying off debt, that should be your focus rather than investing.
- If you already have a well-established retirement portfolio, are saving 15% or more of your monthly income, and are on track to meet your major financial goals with a diversified set of investments, Congratulations! Now you have more flexibility to consider whether and how to incorporate some specialized investments into your mix. Even at this stage, speculative investments should represent only a small portion of your overall nest egg.
While the specific opportunities change overtime, there will always be opportunities in the investment markets. The most important thing to do is meet yourself where you are and take steps to build a solid financial foundation. When your personal financial situation is ready you can take advantage of that "next big thing," whatever it may be at that time, without gambling with your financial well-being.
Each investor’s situation is unique. If you have questions about how or when to incorporate different investment types into your portfolio, call us at (480) 507-2425. We would be happy to review your personal circumstances.
The content in this article was prepared by the article’s author. Cetera Advisor Networks, LLC does not endorse its content, and the views expressed may not necessarily reflect those held by Cetera Advisor Networks, LLC.