How Investors Can Avoid FOMO During Market Rallies

Your group chat is buzzing with friends bragging about gains from a recent hot stock, and you feel left out because you don’t own it. With Bay Street and Wall Street reaching record levels and headline-grabbing rallies from companies such as Nvidia, it’s understandable that new and cautious investors feel tempted to jump in.

Before the fear of missing out pushes you into a trade, take a breath and ask why you want to buy that company’s shares. “Many investors get swept up in the hype,” says Ryan Gubic, a certified financial planner and founder of MRG Wealth Management. Stocks that have already run hard can still rise, but they also risk plateauing or pulling back. That makes timing and purpose essential considerations.

Investing with intention, not impulse

Investing isn’t just about catching the next big winner. It’s about aligning investment decisions with your financial stage, goals and time horizon. Young investors in particular should assess how much time and effort they can commit to learning markets and individual companies.

Gubic recommends speaking with a financial adviser to clarify goals, define risk tolerance and create a plan that addresses both short- and long-term needs. Without a clear strategy, he warns, stock picking can quickly become speculative betting. Ask yourself: are you chasing returns, or do you have a repeatable process and objective for each purchase?

Record highs come with real risks

Buying individual stocks at all-time highs carries real risk. Consider what you can afford to lose and how a decline would affect your finances over the next year, five years or decades. “Be honest with yourself: is this speculative gambling or systematic investing?” Gubic asks.

People tend to broadcast their wins and remain quiet about losses, which can distort perceptions of risk. “They don’t always talk about it when they’ve lost money,” says Mia Karmelic, executive financial consultant at IG Wealth Management. Including the possibility of loss in your outlook helps make more balanced choices.

Markets can be volatile; they recover and often go on to new highs, but pullbacks are normal and happen regularly. Instead of fixating on a stock’s headline price, focus on long-term growth and the health of your overall portfolio. If you don’t have a substantial amount to invest, Karmelic suggests favoring diversified funds—ETFs or mutual funds—over concentrated bets on individual names.

Diversification is your best defense

Young investors often start with limited capital and may be tempted to take bigger risks to accelerate returns. True diversification is difficult to achieve with only a few individual stocks. That’s why regular, disciplined investing—dollar-cost averaging—can be a smarter approach: it smooths purchase prices over time and reduces the chance of mistimed entries.

That said, owning shares of high-performing companies is not inherently wrong. Some companies at all-time highs continue to deliver strong results. The key is to keep those positions small and to protect the portfolio against heavy volatility.

“Invest across different sectors and regions rather than concentrating in a handful of companies or a single industry,” Karmelic advises. Investors with exposure to only three or four names will feel volatility much more acutely than those with broader diversification. For many clients, an individual public equity position represents only about one to two percent of the total portfolio—sometimes even less—so a successful but volatile stock doesn’t dominate their financial picture.

Read more about investing:

• Ethereum hits new all-time high as crypto bull market continues
• Stock news for investors: Big banks see third-quarter profit growth
• How to overcome investing FOMO
• “We’re well off in retirement. How can we pay less tax?”