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Op-ed: Don't let fear of missing out control your investment decisions – CNBC

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The term “FOMO” is defined as “a state of mental or emotional strain caused by the fear of missing out.” It’s also a form of social anxiety — a compulsive concern that one might miss an opportunity or satisfying event, often aroused by posts seen on social media websites.

Although it is natural for people to experience FOMO, such anxiety can lead us to make bad decisions.

Judgment should not be clouded by the desire to fit in or fear of being left out of the fun. This is especially true when it comes to our hard-earned money. Just because your friends and neighbors are investing in a certain stock or asset class doesn’t mean it’s an appropriate investment for you.

Oftentimes, if something seems too good to be true, it probably is.

That’s why it’s important to slow down, research that investment opportunity everyone’s talking about and consider its long-term impact on your financial well-being and goals.

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Those who are new to investing and/or have suddenly come into significant wealth can be especially vulnerable to letting FOMO overtake them when they hear about hot investment tips or opportunities.

How would they know better? Like any other skill, investing takes time to master. Therefore, most investors could benefit from experts who they trust to develop and implement an appropriate investment strategy that reflects their goals and values.

Guiding investor clients through periods of stock market volatility has illustrated how “successful” investing is determined by the amount of time spent in the market — not timing the market.

As the saying goes, “don’t put all your eggs in one basket.” A savvy investor will take a gradual, broad-based approach. To that point, it’s not smart to invest your entire stimulus check or year-end bonus in a single company you’ve read is going to be the next big thing.

Of course, you could buy some shares of that company if you can afford to lose every penny, but we recommend starting simple and obtaining broad-based market exposure through, for example, passive, index-tracking exchange-traded funds, so you can learn how the market works.

After you’ve felt the highs from your potential investment returns and lows from losing money, you might be prepared to take on more targeted or complex investments.

To help pacify any FOMO tendencies, you might consider engaging with a trusted financial advisor who can work with you to develop a financial plan that prioritizes your goals and values. To that end, an effective plan will set up guardrails to make sure you stay on the appropriate path for maintaining your financial well-being and independence.

If a particular investment or other potential decision does not fit the parameters of your financial plan, you will find yourself more confidently ignoring or rejecting them as distractions, rather than being anxious about missing out.

This does not mean that your financial plan should be static.

On the contrary, it should be nimble and dynamic enough to react appropriately to any changes to your overall financial picture, goals or values. That trusted advisor can act as your sounding board to determine whether or not a change in your plan is warranted, or if you are trying to cover up future bad decisions caused by FOMO.

You also need to be careful about borrowing money to invest. Many financial institutions will lend money to investors so they can purchase stocks they’re eager to invest in — and online platforms have made the process easier than ever. But borrowing money at historically low rates to buy shares of a stock that hopefully never goes down in price is often too good to be true.

If you accept a margin loan to buy shares in a hot stock and the stock price goes down, you either have to put in more money to maintain your level of collateral or sell some of your investments to repay your loan. While various free-trading apps make trading on margin easy, it is a very risky strategy that is extremely inappropriate for most investors.

It’s also important to note that complex investments and strategies aren’t necessarily better than more straightforward counterparts. Don’t be fooled by grandiose, sophisticated terms and descriptions.

A complicated investment isn’t a better alternative to the more commonplace ones you’re used to just because it’s more difficult to understand or attracting people who profess higher investing acumen. In fact, it is a best practice to avoid investments that you cannot easily understand. Oftentimes, such investments are complex due to additional risk.

When you’re considering a more complex investment, you should ask, “Can this be done simpler?” Very often, it can — and with lower fees.

But too often, investors are reluctant to believe that because they don’t want to miss out on an investment everyone’s talking about, or they assume that more sophisticated investments are better for their portfolios.

As advisors, we have found that explaining the pros and cons of sophisticated investments, such as complex options strategies, to clients has at times helped them see things more clearly. It also reminded them that basic financial principles like starting and staying simple — and not rushing into trendy or complicated investments — is a smart strategy.

Just like in social settings, trendiness and sophistication don’t necessarily make people or activities better. The same applies to investing.

If you decide to work with an advisor, choose one who is a steadfast partner in guiding you through the investment process and reminding you to avoid FOMO-led decisions.

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Bitcoin edges off all-time high but momentum for more gains this year seen intact

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 Bitcoin fell slightly in Asian hours on Thursday, a day after marking an all-time high on optimism around the launch of the first U.S. bitcoin futures ETF.

The world’s largest cryptocurrency was last down 1.3% at $65,184 after hitting a record $67,016 on Wednesday, but still above a previous peak of $64,895 seen in April.

“We think its going to go higher and we can get to 80 or 90,000 by the end of this year easy, but that won’t be without volatility,” said Matt Dibb, COO of Singapore-based Stack Funds.

In the past few days, he said, traders were starting to pay high rates to borrow to buy bitcoin futures, “and that’s a sign that we could be a bit overextended, and there could be a pullback to come.”

He added he anticipated traders would rotate out of bitcoin and into major ‘altcoins’ – other cryptocurrencies.

Ether, the world’s second largest cryptocurrency, rose 1% to $4,203 and there were also sharper gains in smaller tokens.

Market players say the latest wave of buying has been supported by the launch of the first U.S. bitcoin futures-based exchange-traded fund (ETF) with investors betting this will open a path to greater investment from both retail and institutional investors.

Existing bitcoin exchange-traded funds and products have seen sharp inflows since September.

Average weekly flows to bitcoin funds totalled $121.1 million in October, up from $31.2 million a month earlier, data from London-based CryptoCompare shows.

The three months prior to September had seen outflows following steep losses for bitcoin in May and June.

 

(Reporting by Alun John; Editing by Edwina Gibbs)

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China Evergrande shares fall in resumed trade after $2.6 billion deal collapses

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Shares of China’s Evergrande Group slid as much as 14% on Thursday after a deal to sell a $2.6 billion stake in its property services unit fell through, in the latest blow to the developer whose massive debt woes have rattled global markets.

Evergrande said on Wednesday it had scrapped a deal to sell a 50.1% stake in Evergrande Property Services Group Ltd to Hopson Development Holdings Ltd as the smaller rival had not met the “prerequisite to make a general offer”.

Both sides appeared to trade blame for the setback, with Hopson saying it does not accept “there is any substance whatsoever” to Evergrande’s termination of the sales agreement, and it is exploring options to protect its legitimate interests.

The deal is the developer’s second to collapse amid its scramble to raise cash in recent weeks. Two sources told Reuters last week the $1.7 billion sale of its Hong Kong headquarters had failed amid buyer worries over Evergrande’s dire financial situation.

The latest setback also comes just ahead of the expiry of a 30-day grace period for Evergrande to pay $83.5 million in coupon payments for an offshore bond, at which time China’s most indebted developer would be considered in default.

Evergrande in an exchange filing on Wednesday said the grace periods for the payment of the interest on its U.S. dollar-denominated bonds that had become due in September and October had not expired. It did not elaborate.

“The scrapped transaction has made it even more unlikely for it (Evergrande) to pull a rabbit out of a hat at the last minute,” said a lawyer representing some creditors, requesting anonymity as he was not authorised to speak to the media.

“Given where things are with the missed payments and the grace period running out soon, people are bracing for a hard default. We’ll see how the company addresses this in its negotiations with creditors.”

REASSURANCES

Trading in the Hong Kong-listed shares of China Evergrande, its property services unit and Hopson all resumed on Thursday after a more than two-week suspension. Evergrande trimmed opening losses and was down 9.8% in early trade. Its property services unit dropped 5%, while its electric vehicle arm plunged as much as 10.3%. Shares of Hopson rose 5.6%.

Mainland China’s property index gained nearly 2%.

Evergrande was once China’s top-selling developer yet is now reeling under more than $300 billion of debt, prompting government officials to come out in force in recent days to say the firm’s problems will not spin out of control and trigger a broader financial crisis.

The string of official reassurances are likely aimed at soothing investor fear that the developer’s debt crisis could ripple through China’s broader property sector, which contributes around a quarter to the country’s economic growth.

Since the government started clamping down on corporate debt in 2017, many real estate developers have turned to off-balance-sheet vehicles to borrow money and skirt regulatory scrutiny, analysts and lawyers said.

Statements from other property developers on Thursday exacerbated investor concern of contagion.

Chinese Estates Holdings Ltd said it would book a loss of $29 million in its current fiscal year from the sale of bonds issued by property developer Kaisa Group Holdings Ltd.

Modern Land (China) Co Ltd said it had ceased to seek consent from investors to extend the maturity date of a dollar bond due on Oct. 25. Its shares were suspended from trading on Thursday.

While Chinese high-yield spreads, as indicated in an index of Chinese corporate high-yield issuers, continued to narrow as of Wednesday evening U.S. time, Modern Land’s decision weighed on investors’ mood, said Clarence Tam, fixed income portfolio manager at Avenue Asset Management in Hong Kong.

“The market is worried all single-B companies will choose not to pay,” he said.

(Reporting by Clare Jim in HONG KONG and Andrew Galbraith in SHANGHAI, additional reporting by Anshuman Daga in SINGAPORE; Writing by Anne Marie Roantree; Editing by Jacqueline Wong and Christopher Cushing)

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Is This Crypto Investment Strategy Right For Cannabis? – Yahoo Finance

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You got to know when to HODL ’em, and know when to fold ’em.
If you’re a crypto investor or a fan of long-term holdings, then the strategy may already be part of your process. With cannabis awaiting federal legalization in the U.S. and further market maturation overall, some believe hodling is the way to enter the nascent market.
As is with most strategies, nothing is perfect for every investor.

What is HODL?

HODL dates back to 2013 and a drunken forum post discussing Bitcoin (CRYPTO: BTC) prices, namely BTC’s 39% decline in January.
Rather than bail on the plummeting coin, user GameKyuubi stuck with the stock.
He wrote, “WHY AM I HOLDING? I’LL TELL YOU WHY,” adding, “It’s because I’m a bad trader and I KNOW I’M A BAD TRADER.”
He emphasized the importance of holding in a bear market, a belief now championed by many in the crypto space concerning undervalued coins. September analysis from CryptoBuyer reported that 68% of altcoin buyers are hodling for the long haul.
Mark Lozzi, CEO of cannabis industry B2B and B2C platform Confia, said that “HODLing generally helps investors mitigate against short term volatility and downward market pressure, often resulting in hasty decisions that are by and large against your fundamental investment thesis.”
In crypto or otherwise, sources say hodling success is based on successful execution.
Lozzi noted that crypto assets are at risk of failing, leaving the investor to choose wisely before deciding to hodl. “It is still very important that a HODLER choose the right crypto assets that will endure the digital test of time,” he added.
Shaun Heng, VP of operations at CoinMarketCap, said crypto could be a substantial revenue stream for an investor when done correctly.
“By done right, I mean, you hodled for at least five years,” he said. “Hodling six months doesn’t count.”
Heng said the model works if someone is looking for an investment that won’t require much time. Though, he added, “It can definitely be a challenge to see massive fluctuations in your net worth, even if it trends upwards.”
Stefan Ateljevic, a crypto entrepreneur and founder of the review and information website Crypto Blokes, endorses the strategy but notes it isn’t for everyone.
“The price of crypto tends to be volatile and changes on a daily basis,” Ateljevic noted, adding that a good hodler is a stubborn investor who buys on the dip and remains committed to cashing out in the future for more significant returns.
Ateljevic didn’t always practice this investment methodology. Eight years ago, he invested in Bitcoin but didn’t hold the first time around. He told Benzinga that he “pretty much panic sold a good chunk when it was less than $10,000 per coin.”

To his good luck, he was mining Ethereum (CRYPTO: ETH) from day one.

Discussing potential coins worth considering, Ateljevic said, “Hodling for five years could see that give you massive returns on your investment.”

Should Cannabis Investors HODL?

As in crypto, cannabis investors may want to consider hodling if a long-term investment strategy suits their strategy.
Lozzi said a hodl-type strategy could pay off in sectors like genetics and brands though he isn’t as sure about cultivation, which could see commoditization and low-cost producers leading the pack. He noted that the best bet for seeing an eventual ROI in cannabis is investing in leading names, innovators and market share players. “The returns will come,” he said.
Investors often draw parallels between cannabis and crypto. However, Heng cautions that the two emerging spaces are not as similar as some assume.
“On the bullish side for cannabis, it’s an industry that still doesn’t have lots of established players, meaning there is room for competitors,” he said.
Heng then countered his point. “Nevertheless, Bitcoin is a deflationary digital currency, which is something the world hadn’t seen before.” As such, he sees Bitcoin’s market potential reaching heights that cannabis won’t.

Photo by RODNAE Productions from Pexels

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