Stocks are flying, but these can still be trying times for traditional buy and hold investors.
It’s not that they’re doing poorly in the markets. More that they’re being outperformed hugely by speculative investments they’d normally avoid. Fear of missing out (FOMO) is a phrase usually used by millennials and members of Gen Z, but it applies to at least one reader of this newsletter who is of baby boom vintage.
“I have nothing but contempt for social media,” he writes. “However, I do suffer a slight FOMO, and admit to feelings of envy of the millennials who have managed to cash in handsomely on the social media-fuelled [stock market] action.” His question: Should he buy a new exchange-traded fund that holds stocks with positive investor sentiment on social-media platforms such as Twitter, Reddit and StockTwits, as well as in news articles and blog posts.
The VanEck Vectors Social Sentiment ETF (BUZZ-A) holds 75 large-capitalization stocks that, as of early March, included a mix of old and new economy companies. There’s Ford and Barrick Gold, but also Uber Technologies, Beyond Meat and Facebook. The fund started trading in early March, too soon to produce return data of any worth. The fee is high by ETF standards, at 0.75 per cent.
Though brand new, BUZZ is already generating some buzz with investors. This reader says he’s tempted to put 1 per cent to 5 per cent of his overall portfolio in it, but wonders whether he’d be chasing a trend that will pass.
Social media is here to stay as a forum for sharing investing ideas, but it’s a leap to assume that the information being discussed online is worth using to guide your investing. This information is only as good as the people providing it and, right now, everyone looks like an investing genius because stocks have mostly been rising for almost a year. We won’t really know if BUZZ is onto something until it’s tested in a down market.
I get this boomer’s FOMO, but wonder whether buying BUZZ will end up giving him a case of RABI. That’s regret at buying in. Expect an outbreak of that when stocks hit their next down phase.
-- Rob Carrick, personal finance columnist
This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you or you’re reading this on the web, you can sign up for the newsletter and others on our newsletter signup page.
Rob Carrick’s 2021 ETF Buyer’s Guide: Best U.S. equity funds
ETFs listed in this latest guide from Rob have at least a five-year track record and can be considered for core U.S. exposure, which means they could be your one and only U.S. equity fund.
Some mortgage rates are getting even cheaper
Attention real estate investors: major lenders have hiked fixed five-year mortgage rates over the past few weeks in response to rising government bond yields. But, in recent days, new home buyers and those looking at refinancings have quietly been seeing a drop in the costs of some mortgages to even lower levels than over the past year. Darcy Keith reports.
Canadian oil stocks fly as green plays slump in energy reversal
Investors who have aligned their portfolios with environmental, social and governance principles had it easy when renewable energy stocks were soaring last year and traditional energy was in the dumps. ESG delivered, and handily. But the two sectors have switched roles in 2021, offering a challenge to green-leaning investors. Will ESG’s popularity persist if returns lag? David Berman looks at the latest trends.
Airline stocks cleared for takeoff, but turbulence ahead
Investors have seemingly cleared airline stocks for takeoff, but the industry still faces a long and bumpy climb. The S&P 500′s airline index, which includes American Airlines and other major carriers, has jumped nearly 25% so far in 2021 as vaccine distribution ramps up and begins to clear the way for a full economic recovery. The problem? Airlines won’t likely return to their pre-pandemic revenue and passenger levels for years. Damian J. Troise of The Associated Press reports.
Riding GameStop’s resurgent rally: ‘not for the faint of heart’
The latest resurgence in GameStop shares has reinvigorated true believers. Still, many analysts point to the rally in beaten-down “meme stocks” championed in forums such as Reddit’s WallStreetBets as evidence for speculative excess in stimulus-fueled markets. Krystal Hu and Sinead Carew of Reuters report.
Volatile markets creating challenges for analysts trying to forecast stock price targets
Wild trading swings in the first few months of 2021 are creating challenges for equity analysts, compelling some to quickly slap sell ratings on overvalued stocks or re-evaluate their financial modelling altogether. Vanmala Subramaniam reports.
Others (for subscribers)
Are you a financial advisor? Register for Globe Advisor (www.globeadvisor.com) for free daily and weekly newsletters, in-depth industry coverage and analysis, and access to ProStation - a powerful tool to help you manage your clients’’ portfolios.
What’s up in the days ahead
Ian McGugan takes an in-depth look at the bitcoin frenzy. Is this another mania bound to end badly?
More Globe Investor coverage
For more Globe Investor stories, follow us on Twitter @globeinvestor
You may also be interested in our Market Update or Carrick on Money newsletters. Explore them on our newsletter signup page.
Compiled by Globe Investor Staff