Protecting Your Money from Market Hype

Social media and the technological ease of trading today are energizing one of investors’ biggest enemies: FOMO, or the fear of missing out. More than half (57%) of Americans say they have made a financial decision after seeing others’ lifestyles online, according to a 2025 survey from Empower. And half of Americans said that seeing what others are buying on social media motivates them to spend money due to FOMO.

Of course, following the crowd, especially impulsively, goes against standard investing advice and can result in poor returns over time. But there are ways to combat the impulse to give in to FOMO. Below, we’ll walk through why you should avoid it and the alternatives to take.

What Is FOMO Investing?

When it comes to investing, FOMO leads to impulsively buying into the latest trend, often based on chatter on Reddit or TikTok. Seeing people rave about how much money they made from a certain stock can spark a fear of missing out on a great opportunity, and many people act on that fear. 

Why is acting on this temptation bad? First, even rational individual investors underperform the S&P 500 because of poor decisions regarding market timing. Those returns will only get worse if you start following the herd instead of making informed, independent decisions. FOMO leads to irrational decision-making as investors prioritize the chance of short-term gains over long-term planning.

After all, once the internet is talking about how great an investment is, that investment has likely already been overbought and has grown more expensive. Plus, it could be about to be abandoned by earlier investors who’ve decided to take profits.

The Dramatic Rise and Fall of GameStop

Perhaps the most famous of “meme stocks” was GameStop (GME). Thanks to social media hype, in January 2021, its share price rose from around $5 to about $120 in under three weeks—a gain of 2,300%. Many of those who arrived late to the party, though, endured significant pain. After topping out at $120.75, it was trading for just $10.97 a few weeks later—a loss of 91%.

How to Avoid FOMO

First, understand that social media hype is a danger to your money. It fuels herd behavior and inappropriate risk taking. Be skeptical of any stock tip you see on social media and consider what might be in it for the people hyping that stock; they might be looking to profit off your FOMO.

Do your research

At the very least, do some significant research into any stock or other financial investment before you risk your money. Peter Lazaroff, the chief investment officer of Plancorp Wealth Management, believes research is key.

 “Anytime you make an investment, you should put at least as much time into researching that investment as you would researching a vacation spot, restaurant, or major appliance,” he said. “And when you’re researching an investment, you need to consider multiple sources and channels. It’s not enough to just look at different posters on Reddit or X, nor is it enough to look through TikTok and YouTube for information about a certain investment.”

Take a cooling-off period

Lazaroff also suggests waiting at least a month before acting on an investment idea. “Investing is a long-term endeavor, so something that is a good idea today should still be a good idea in a month,” he said. “And if you don’t feel that way about the investment in question, then you are more likely speculating on price than you are investing in a business.”

The Bottom Line

FOMO investing involves piling into investments being hyped on the internet simply because you’re afraid of missing out on what others say is a great opportunity. Behaving this way generally doesn’t end well and can be avoided by setting rules that prevent you from acting on impulses and doing your own research into any investment.