Macroscope | Fear of missing out a driving force in markets in China, Silicon Valley

Call it status anxiety, call it greed or just call it clever momentum trading, but the fear of missing out is an under-appreciated force in financial markets.

No one likes to miss out on a good thing, especially when they see their friends, neighbours and rivals cashing in, a phenomenon three-card-monte dealers have long understood.

There are (at least) two markets right now which show meaningful signs of attracting capital in substantial part because of this fear: China’s stock market and Silicon Valley’s unicorn factory.

In China, which is enjoying a vertiginous market ride upwards, money is flowing into stocks in part because investors believe the authorities ’want’ a bull market and in part because of media and social media attention fanning the flames.

Bill Janeway, a veteran venture capitalist, sees fear of missing out, or FOMO, as part of the motive force behind the rush of private capital into early-stage and more mature but often still unprofitable tech companies.

"We are in an environment of extraordinary low interest rates, of enormous quantities of liquidity looking for a return," Janeway said in a podcast interview with venture capital company Andreessen Horowitz. "There is the phenomenon of FOMO, fear of missing out on the next Facebook, the next Twitter."