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 column 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.
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