FOMO Becoming the Leading Cause of US Stock Market Growth, Warns JPMorgan
According to Marco Kolanovic, the global market strategist at JPMorgan, the fear of missing out (FOMO) is becoming the primary reason for the growth of the US stock market in 2023. This means that investors, fearing to miss out on profit opportunities, continue to actively invest in stocks. However, Kolanovic warns that the market is already significantly overvalued and investors may be disappointed when the US economy begins to slow down.
Looking ahead, Kolanovic predicts that in 2023, the US stock market will fully transition into FOMO territory. This means that more and more people will be investing out of fear of missing out on profit opportunities. Not only the technology sector, but also other market sectors are significantly overvalued. According to data, the forward price-to-earnings ratio of the S&P 500 currently stands at 19.4x, which exceeds historical values. Kolanovic warns that current stock valuations represent a 10% premium.
Now, let’s understand what FOMO is. It is an abbreviation of the English expression “Fear of Missing Out.” FOMO describes a state where people are afraid of missing out on something valuable or beneficial and therefore take certain actions. This concept is actively used in situations where people react to the possibility of missing out on valuable resources or advantages and start acting out of fear of missing opportunities.
Overall, according to Kolanovic, FOMO plays an important role in the growth of the US stock market. However, he cautions against overly optimistic market perceptions, as he believes that the market is already overvalued and the US economy may slow down, leading to investor disappointment. In the future, according to forecasts, FOMO will become an even more significant factor in the US stock market, potentially leading to further stock overvaluation.