Markets are supposed to run on fundamentals. In reality they often run on fashion and on FOMO, according to a recent study. <\/p>\n
The study introduces a Global Fear of Missing Out (FOMO) index, built from Google searches for terms such as \u201cbuy stock\u201d, \u201cmissed out\u201d, \u201cget rich quick\u201d and \u201cBitcoin price\u201d. <\/p>\n
Since 2004 high readings on this index have reliably predicted lower returns, weaker risk-adjusted performance and \u2013 oddly \u2013 less volatility. The explanation? When investors all rush for the same trade, prices drift from fair value, but everyone queues in the same place, smoothing out wild swings.<\/p>\n
However, the study\u2019s twist is political: FOMO bites harder in democracies.<\/p>\n
Open societies, with faster news cycles and more vocal investors, spread narratives quickly. That makes markets in democracies more responsive to sentiment, for good or ill. <\/p>\n
Elevated FOMO has a stronger impact on returns there, and its dampening effect on volatility is more pronounced. <\/p>\n
The research, which used the Economist Intelligence Unit\u2019s democracy scores to trace the link, suggests democracies don\u2019t just spread information more freely. They also spread bad ideas more efficiently, particularly when money is involved.<\/p>\n","protected":false},"excerpt":{"rendered":"Markets are supposed to run on fundamentals. In reality they often run on fashion and on FOMO, according…\n","protected":false},"author":2,"featured_media":444866,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3091],"tags":[150092,12634,1213,51,3085,12810,1700,7372,150093,474,3240,1234,150094,59681,150095,2441,8501,48463,65115,31970,285,101563,7063,1017,10734,101564,65118,16,15,25002,978,659],"class_list":{"0":"post-444865","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-2025uspolitics","9":"tag-american","10":"tag-americas","11":"tag-business","12":"tag-business-news","13":"tag-central-bank","14":"tag-economy","15":"tag-federal-reserve","16":"tag-federal-reserve-fomc","17":"tag-finance","18":"tag-financial","19":"tag-government","20":"tag-government-news","21":"tag-industries","22":"tag-macro-economics","23":"tag-markets","24":"tag-new-york-city","25":"tag-new-york-stock-exchange","26":"tag-north-american","27":"tag-nyse","28":"tag-politics","29":"tag-securities","30":"tag-stocks","31":"tag-u-s","32":"tag-u-s-government","33":"tag-u-s-stock-market","34":"tag-u-s-a","35":"tag-uk","36":"tag-united-kingdom","37":"tag-united-states-of-america","38":"tag-us","39":"tag-usa"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115251653152164436","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/444865","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=444865"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/444865\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/444866"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=444865"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=444865"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=444865"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}