Global FOMO Index, a novel sentiment metric = up & up!

👉 elevated FOMO predicts lower stock returns (1.7%–2%), reduced volatility (2.02%–2.1%), and weaker Sharpe ratios (-4%), reflecting a significant dampening effect

👉 suggesting that periods of heightened FOMO are associated with poor risk-adjusted performance ... aka ... heightened investor sentiment does not lead to sustained financial gains ...

👉 buying stocks not because of fundamentals, but because they are hot & trending now, or because they have had large returns in the recent past is rarely a good recipe ...

👉 Key Maverick notes:

• no FOMO captured before 2007-2009 GFC (FOMO was then in Real Estate + less degenerate economy & social media get rich quick temptations)

• but did capture quite well the 2018 hot market and then bear market, 2021 stock market mania and then the 2022 bear market & the current mania episode

👉 index exhibits high persistence and a robust inverse relationship with key market outcomes, and offering fresh insights into the interplay of psychology, politics, and finance

👉 all in all, the Global FOMO Index serves as a useful tool for understanding market dynamics & managing periods of heightened sentiment-driven activity

P.S. Index built via Google Trends 6 key search terms: 'FOMO, Buy stocks, Get rich quick, Missed out, Trending now, Bitcoin price'

Source: Global FOMO: The Pulse of Financial Markets Worldwide via Yosef Bonaparte University of Colorado

maverickequityresearch.…