I recently wrote about the fear of missing out, or FOMO, and how it has shaped my trading (for better or worse) over the years. Today I want to introduce the opposite concept: the joy of missing out. It’s a new trading strategy we can all embrace, especially right now.
And yes, I know sitting on the sidelines can be hard. We are traders. We want to participate and make trades that allow our portfolios to grow. It can be painful to watch the markets or a particular stock move upward, knowing we missed that opportunity.
But there are times when it’s appropriate and even acceptable to step aside and wait your turn. When we are in a bearish environment, like we are now, trading becomes a daunting task. Are you getting in at a good price? Will you regret your decision? Is this a positive move upward, or just a brief and fleeting move?
When you are confronted with highly volatile days and don’t protect your assets, they are exposed to loss. Prices may fall sharply and not come back quickly. Can you afford to wait around for prices to recover just to break even?
The joy of missing out
You can be very happy and satisfied sitting on the sidelines, waiting for a better moment to trade. Imagine the joy of missing out on big moves down and watching your portfolio slide lower in value. Keeping your portfolio safe while maintaining a healthy cash reserve is the ultimate win – even if your account does not rise.
I’ve heard it said that the “return of capital” is often more important than the “return on capital”. When you lose money, you face an uphill climb to recover. The loss may not even be your fault, but a loss is a loss. The joy of missing out ensures you don’t land in that difficult position.
So sit back and relax. Keeping your money safe until a better trading environment comes along helps guarantee you’ll be ready for the next move higher.