Second Mistake: FOMO (Fear of Missing Out)
AMC ring any bells? I couldn’t avoid it—family, friends and colleagues were talking about it. Online, it was impossible to escape the hype. The jargon was flying everywhere, and it was easy to get sucked in. The potential squeeze! Retail investors taking down hedge funds! All the leveraged positions! Why settle for an 8% gain when you could see hundreds of percent instead? HODL!
Well, AMC is down about 29% this year. That doesn’t mean it won’t go back up, but it’s been falling consistently since June 2021. The problem? If you keep holding, you might be stuck in a losing position for a long time—or worse, it might never recover. This is where risk management comes in, specifically setting stop losses.
I personally FOMO’d into AMC in 2022. My positions were down over 50%, and eventually, I had to accept the loss and close them. If I’d set a reasonable stop loss—say, 20%—I could have cut my losses earlier. But that’s another discussion.
None of these mistakes or lessons are groundbreaking. This one, though, was particularly hard to avoid. Deep down, I knew it was a bad idea, but staying disciplined is tough. Social media makes it worse—stocks “going to the moon” sound like a sure bet when you see enough people saying the same thing. In my experience? That’s rarely the case.
Not Following Your Gut
On the flip side of FOMO, there’s another mistake I made: not trusting my own analysis and letting all the noise get to me.
I follow a simple trading strategy using basic technical analysis. I’ll break it down more in another post, but for now, here’s an example.
Bitcoin. Back when it was around $16,500, everything in my analysis pointed toward opening a buy position. Altcoins were deep in the red. The Fear & Greed Index was showing extreme fear—a sign of market overreaction. But everywhere I looked, people were calling Bitcoin dead. Crypto was finished. So, I hesitated.
I didn’t buy. Not until it was over $30,000.
Even though my own research suggested an uptrend, I second-guessed myself and listened to the noise instead.
The Takeaway
Take your time. Don’t rush. Zoom out and look at the bigger picture. If a stock has been in a downtrend for a year, why are you suddenly jumping in?
Do your own research. Stick to your strategy. And be extra careful about opening positions based on social media hype.
Have you ever FOMO’d into an investment? Did it work out for you, or did you learn the hard way?
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