YOLO beats FOMO in the pandemic-era bull market
The stock market is down, but extreme bets live on.
Why it matters: The pandemic-era bull market — now come to an end — was fueled in equal part by YOLO and FOMO.
- The former — "you only live once" — was based on the idea that in a world of zero interest rates, the most likely road to wealth was not a slow accumulation of compound interest, but rather a moonshot that involved gambling everything on a low-probability but ultra-high-return bet.
- The latter — "fear of missing out" — was based on the idea that everybody else was building wealth in the markets, and that if you didn't jump in yourself, you'd lose your best (and possibly only) chance at getting rich.
Be smart: YOLO started out as a zero interest rate policy phenomenon. FOMO is a product of the bull market. Both have now come to an end, but YOLO is proving more resilient.
- A bear market can boost YOLO activity, because the only thing worse than seeing your money go sideways is watching it go down. But bear markets tend to kill FOMO stone dead.
The big picture: Elon Musk is the YOLO king, deeply at home among YOLO memelords. For them, if y0u're not risking everything, you're not really living.
- The purpose of risking everything is not to get rich — Musk, famously, doesn't live like a rich person — but rather to achieve impossible goals. Those include making the internal combustion engine obsolete, colonizing Mars, or creating a workable public square based on an absolutist free-speech vision.
By the numbers: Over the full course of the pandemic, YOLO stocks have massively outperformed FOMO stocks.
- Since January 2020, the promise of Tesla has rewarded investors with a 955% gain, while anybody who bought and held GameStop over that period is sitting on a 2,010% gain. (Of course, there are countless YOLO investments that went to zero in that time; that's how YOLO works.)
- Over the same period, tech giants like PayPal and Netflix have actually fallen in price — they're down 23% and 42% respectively. Other losers include Disney, Intel, and — at least until yesterday's earnings report — Facebook.
The bottom line: Sometimes, losses only serve to create a desire to gamble even bigger, in an attempt to win them all back. In a world filled with crypto hype, YOLO isn't going anywhere.