FOMO

FOMO - short for “fear of missing out” - is one of my favorite acronyms.  I believe it is also a powerful contrarian indicator.  

When FOMO is rampant, it’s usually a good sign of excess.  When you are jealous that even your cabbie (Uber driver for you youngsters) is getting rich in the stock market, there is a good chance that the market is overvalued.  When cocktail party conversation involves “chest beating” over who has made more in the housing market, it’s probably time to sell and become a renter.

Today’s environment is interesting.  It’s hard to argue that investments are “cheap”, which can often be a sign of FOMO.  However, today you primarily see an interesting permutation of FOMO.  That is, the fear of missing out on “calling the top.”

I have no idea what this means for asset prices.  However, it’s enough to make any contrarian think.