How to get over investment fomo and hindsight bias

Investing FOMO: how I missed out on big investments and still feel OK

My friend bought some AMC stock at $8 and sold it for $56. Incredible gains. I was surprised at his disappointment:

If I only had put in my life savings in AMC…I’d be a millionaire now.

I’ve also ruminated on missed opportunities that seem so obvious now: Google, Apple, Netflix, Bitcoin…

Welcome to Hindsight Bias: the tendency to see past events as having been more predictable than they actually were.

The key to feeling less regret: zoom out look at the past with a different lens.

Minimize regret by seeing the past more clearly

Instead of blaming our past selves for missing opportunities, we should consider everything else that was happening in the past:

Work, hobbies, family responsibilities, and the stresses of life.

To minimize regret, travel back to the past and ask yourself: “Do I regret everything else that I was doing outside of investing? “

I’d bet that most people will say “No.”

If you weren’t investing, you were probably living.

Seeing the full picture is helpful in at least two ways:

  1. Humanize yourself: we’re not machines optimizing every decision
  2. Focus on learning rather than regret

It’s less productive to think “I should’ve bought that stock” than to ponder: What conditions led me to miss out on that opportunity? How do I adapt in the future? And most importantly…what kind of investor do I want to be?

Identify what kind of investor you want to be

If you decide that you do want to be a more active investor, that’s great too.

That can lead to productive activities like doing deeper research on stocks or improving your psychology around money.

Or, maybe you’ll decide that there are more important things in life than taking advantage of every single financial opportunity.

In that case, being a passive investor by automatically investing into the S&P 500 can be enough.

And remember – don’t let the FOMO of missing one investment blind you from other investments.

“The best time to plant a tree was 20 years ago. The second best time is now.”

Hindsight is 20/20 because we take a magnifying glass and blow up the past, blurring out the bigger picture.

Putting this aside, we give ourselves a chance at self acceptance: We made the best decision we could, at the time of that we made it.

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