Why this stock market makes so many of us want to scream

Mint

31-05-2025

Most investors have felt FOMO, fear of missing out. Nowadays, many are feeling the opposite.
In April, turmoil over President Trump's tariffs drove U.S. stocks down 12% in four days. Some investors bailed out, worried Trump's policies would overturn decades of agreements that helped global trade thrive.
Others had gotten out even earlier, either in advance of the second Trump presidency or because they thought back-to-back double-digit annual gains, like those U.S. stocks earned in 2023 and 2024, weren't sustainable.
Now, markets have erased April's losses after Trump backtracked on several tariffs and a court decision Wednesday cast doubt over his trade-war plan. That hasw many people wondering if they should be more fully invested.
Their paralyzing dilemma: They aren't sure when or how to do that.
'I don't have FOMO," says Michael McCowin, an investor in Madison, Wis. 'I have FOGI: fear of getting in."
In his individual retirement account, where he does most of his investing, McCowin got out of stocks by early last year, as the S&P 500's return of 26.3% in 2023 was followed by nearly an 11% gain in just the first quarter of 2024.
Feeling FOGI can make you feel like an old fogey even if you're nowhere near McCowin's age of 86. McCowin is a former chief investment officer at Wisconsin's pension board, which manages the retirement assets of public employees in the state.
So he isn't a naive or impulsive investor. But, he says, his FOGI is a strong 'gut feel."
What, specifically, is McCowin afraid of? 'Getting in too early," he says, before the market hits bottom.
'I probably went too far by going all to cash," he adds. 'I do believe we're on the cusp of what could be a very significant downturn, and if that happens I'll be prepared for it. And if it doesn't, I'm collecting 4% to 4.5% [on cash] and that's more than enough for me."
McCowin emphasizes that he would never advise his grandchildren to do what he did, as they have decades of wage-earning ahead of them to help cushion market crashes. And I don't think his moves are advisable for most people. But his FOGI does remind us that investors often forget to ask: What am I afraid of?
A shift like McCowin's is 'not about mitigating risk, it's about mitigating regret," says Meir Statman, a finance professor at Santa Clara University who studies the psychology of investing.
'The fear of getting back in is the fear of feeling really stupid," says Statman. If the market goes up before you get back in, 'you'll have to buy stocks back at a higher price and say, 'God, why did I ever sell?'" If it goes down after you get back in, you'll kick yourself over that, too.
Let's put the market's recent moves in longer-term perspective.
Since the end of World War II, the S&P 500 has lost between 5% and 10% 63 times, and it has dropped between 10% and 20% 25 times, according to Sam Stovall of CFRA, an investment-research firm. It's gone down at least 20% 14 times; three of those were epic losses of 40% or more.
In the worst declines of at least 40%, the downdrafts lasted an average of 23 months, and stocks took an average of 58 months—just under five years—to gain back their losses in full. (These figures don't include the reinvestment of dividends, which would have shortened the recovery times.)
One advantage of April's turbulence is that it's so fresh in your mind, it's hard to kid yourself about what you believed a few weeks ago.
Hindsight bias, the human tendency to believe that our past predictions were much more accurate than they turned out to be, fools investors all the time.
This time, though, you can probably admit it: Those first few days, as Trump slapped huge tariffs on the rest of the world and markets reeled, you leaped to the conclusion that the global economy had been irreversibly disrupted. Like most investors, you probably underestimated how resilient and adaptable people, companies, markets and governments are.
The other advantage of the market's April stumble was that it happened so fast. In four epic weeks, stocks plunged, then bounced back. For all the S&P 500's heaving around, it's up 1% in 2025.
So you can't feel the fear of getting in if you never had time to get out.
That's a blessing, because market timing is much harder than it seems. As John Montgomery, founder of Bridgeway Capital Management in Houston, points out, getting out of stocks before a crash is only a fraction of what you need to do as a successful market timer.
You have to be right about your economic forecast, when it will begin to take hold and when it will end. You also have to be correct about when and how the stock market, interest rates and other variables will respond.
'You have at least four opportunities to get it wrong," says Montgomery, and 'if you're off by only a couple of months, that can destroy any chances of making money."
If, like McCowin, you did get out, then the best way to overcome your FOGI is by taking baby steps. Set up an automatic investment plan to transfer a fixed amount of money from your bank or other cash holdings into a stock fund or brokerage account. Spread these transfers out in equal monthly increments over at least a year.
That should reduce your fears of buying back all your stocks at a higher price than you sold them for, or of buying too much right before a crash. What's more, you reduce the risk of being tempted to think you know exactly when to get back in.
Write to Jason Zweig at [e-mail]