Billionaire trader and investor Stanley Druckenmiller bought Bitcoin after watching its price go up and feeling the fear of missing out, aka FOMO. “I felt like a moron,” he said in an interview with the online news site the Hustle in May. He cashed out part of his $20 million bet after prices soared—“my heart’s never been in it”—but described the stampede of money managers into the cryptocurrency as an elephant trying to fit through a keyhole.
Druckenmiller has felt the FOMO before. In 1999 he loaded up on $6 billion worth of tech stocks, only to lose $3 billion in six weeks. “I was just an emotional basket case, and I couldn’t help myself,” he said years later. This time around, he looks more like a bellwether for a broader kind of investor panic-buying in developed economies after a bruising pandemic year. We are all Stanley Druckenmillers now.
It’s not just crypto: It’s stocks such as those of AMC Entertainment Holdings, GameStop, and Tesla that are beloved on Reddit and Twitter, and it’s the houses and condos being snapped up almost as soon as they list. The pressure to keep up with neighbors, friends, and social media meme lords who seem to be in the process of becoming extremely wealthy—or, at least, talking about it—can feel unbearable. It’s only human, and, as Druckenmiller’s example shows, it’s not something only small investors and novices feel. Telecommunications companies overinvested like a thundering herd in the 1990s, and a lot of them went bust in unison as a result. In the early 2000s, few bankers were willing to tap the brakes on increasingly risky and baroque mortgage investments.
Today, a new generation of stock traders has known market crashes only as short-lived dip-buying opportunities, leading to a record rise in brokerage account openings. Rock-bottom interest rates have fueled big profits on flipping real estate— some $66,000 on average per home, according to research firm Attom Data Solutions. People flush with pent-up savings after a year of lockdowns have more ways than ever to throw darts at the financial dartboard: zero-commission, zero-minimum trading apps; social media message boards; and exchange-traded funds you can hop in and out of as easily as stocks, including a few that explicitly play to the trend-chasing crowd with such tickers as BUZZ and, yes, FOMO.
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