FOMO and the stock market

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by Luke Davis, Stewardship Capital Financial Advisors

This year has been a roller coaster for investors. From steep losses in the early months to meteoric gains since April, 2025 has tested investors’ nerves. With a positive swing of nearly 30% in the last six months, it’s easy to feel tempted to take on more risk with your investments.

Wall Street trumpeting record highs, friends sharing big wins, and social media proposing “can’t-miss” stock tips. That fear of missing out (FOMO) often convinces investors to abandon their usual risk tolerance and buy at precisely the wrong moment.

Morningstar’s latest “Mind the Gap” study shows investors earned, on average, 1.2% less per year than their funds over the past decade, mostly from buying after rallies and selling during declines. This “behavior gap” often reflects enthusiasm that builds late in bull markets, pushing some investors to take on extra risk just before valuations peak.

Getting in late can also magnify losses when markets inevitably pull back. Many novice or risk-averse investors panic-sell after a drop, locking in losses and widening the gap between market returns and their own results.

To stay disciplined, even when markets tempt you to chase gains, keep these principles in mind: First, stick to your risk profile. Your tolerance for risk doesn’t change as often as market headlines do. Constantly shifting from aggressive to conservative is a recipe for disappointment.

Second, while reallocating your portfolio may make sense from time to time don’t chase. Successful investing is less about finding the hottest stock and more about avoiding the trap of arriving late and leaving early.

Lastly, remove emotion from the investing process. A qualified investment manager can offer objective, level-headed advice and help you stay steady, whether you fear losses or missed gains.

History shows that periods of euphoria and ill-advised aggressiveness, especially among do-it-yourself investors, often precede market pullbacks. It’s tempting to assume recent trends will continue, but markets rarely move in straight lines. The safest way to build lasting wealth is to follow a thoughtful strategy, keep your risk aligned with your true tolerance, and let patience—not emotions—guide your decisions.

By resisting FOMO and focusing on discipline, you give yourself the best chance to weather volatility and capture the market’s long-term rewards.

(Past performance is no guarantee of future results. The advice is general in nature and not intended for specific situations)

Stewardship Capital is a Registered Investment Advisor Firm that focuses on building lasting relationships to help clients achieve their goals in life. For more information, visit www.stewcap.com.