Principle 7 of 11
Control Your Emotions: Don't Let FOMO or Fear Decide
Don't follow the crowd. The best decisions feel boring at the time.
Control Your Emotions in one sentence
Controlling your emotions means making money decisions with a plan instead of with excitement, fear, or the feeling that everyone else is doing it.
Two feelings cause a huge number of bad investing decisions. The first is FOMO — the fear of missing out — when something is soaring and everybody is talking about it. The second is panic — when something is falling and it feels like it will never stop. Both feelings push people to do exactly the wrong thing at exactly the wrong time.
Example: the buy-high, sell-low trap
Imagine a (made-up) investment that everyone at school is suddenly talking about. Its price has shot up to $50 a share. A kid named Jordan feels the FOMO, uses $200 of savings, and buys 4 shares at $50.
- A few weeks later, the hype fades and the price drops to $35. Jordan's 4 shares are now worth 4 × $35 = $140.
- Jordan panics and sells — locking in a $60 loss ($200 − $140).
- Months later, the price climbs back to $50. If Jordan had held on, the shares would be worth $200 again.
Notice that the investment itself ended up right where it started. The loss came entirely from the emotional timing: buying when excitement was highest, and selling when fear was highest. That is buying high and selling low — the exact opposite of the goal.
Why it matters
Markets are made of people, and people get excited and scared together. When everyone is excited, prices can run far above what things are worth. When everyone is scared, prices can drop far below. Investors who stay calm are the ones who are not forced into bad trades by the crowd's mood.
A few tools that help:
- Have a plan before you invest — what you're buying, why, and how long you expect to hold it.
- Use a cooling-off rule: wait 48 hours before any money decision you feel excited or scared about.
- Ask: "Did something about the business actually change, or just the price and the mood?"
Common mistake: thinking "everyone is buying it" means it's safe
Popularity is not the same as value. By the time something is being talked about everywhere, a lot of the excitement is often already baked into the price. The best decisions often feel boring — or even a little uncomfortable — when you make them.
Check yourself
1. What does FOMO stand for, and how can it hurt investors?
Show answer
Fear Of Missing Out. It pushes people to buy after prices have already jumped, often near a peak.
2. You buy 5 shares at $20 and sell them at $16. How much did you lose?
Show answer
$20. You paid 5 × $20 = $100 and sold for 5 × $16 = $80, so $100 − $80 = $20.
3. Name one tool for keeping emotions out of money decisions.
Show answer
Any of: having a plan before investing, a cooling-off waiting period, or asking whether the business actually changed.
Try it: Bull or Bear?
Bull or Bear? is a Daily Challenge game where you look at an unlabeled real historical chart and guess whether it went up or down next. In Bull or Bear?, notice your gut reaction to each chart before you guess — then see how often that gut feeling was right.
Learn one of these every morning
Market Juice is a free daily digest for kids ages 10–16: real market news, three quick games, and a lesson that ties back to these principles — about 3 minutes a day.