How to Get Off the Investing Sidelines
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What do you think the opposite of FOMO or the fear of missing out is? FOGI, the fear of getting in. And FOGI is all too common among investors these days. When people sense a high level of uncertainty in the market,

It makes these kinds of decisions more complicated because often people are making these judgments partly based on what their peers are doing. And if all your peers are doing is expressing confusion and watching the headlines nonstop, it can be hard to figure out what to do. After such an up and down few months in the stock market, spooked investors know they're probably playing it a little too safe.

what's the first step to jumping back in the fray? We'll talk with WSJ's The Intelligent Investor columnist, Jason Zweig, about how to conquer phobia and maybe even how to use it to your advantage. That's after the break.

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After the Trump administration's tariff plan sent the market into a tailspin earlier this spring, some investors decided to pull out rather than play ball. And others had taken a step back even earlier. But now the market sees have calmed. So how do you get back in? Wall Street Journal's The Intelligent Investor columnist Jason Zweig joins me to talk more. Jason, one of your readers, Michael McCowan, wrote to you and coined this new term.

fogey or fear of getting in. How did he arrive at this fogey place? Well, he would say a couple of things. First of all, he got old and he became a fogey, an old fogey. And secondly, he has pretty strong views. He's fortunate. He's a former professional investor. He has plenty of assets to see him through. He's 86. And he feels that the

Potential upside from staying in the market at this point is not as great as the potential downside of staying in and perhaps losing a lot of his money without time to recover. And after such a turbulent period in markets, you talk to some investors who say they think they should be more fully invested.

but they still are in that place that Michael is in, that sort of foggy place. Why do you think so many investors feel this way? Uncertainty is always high, except at total market turning points like, say, 2020 or 1987. And when people sense a high level of uncertainty in the market,

It makes these kinds of decisions more complicated because often people are making these judgments partly based on what their peers are doing. And if all your peers are doing is expressing confusion and watching the headlines nonstop, it can be hard to figure out what to do. Foggy is contagious. Yeah, it absolutely is.

And your column, which is linked in our show notes, does such a great job of giving us some much-needed historical perspective. How do the last few market cycles fit into the big picture of the last 80 years in markets? The key thing to put in perspective as an investor is that

The long run tells us unambiguously that you should be rewarded for sticking with U.S. stocks if you can stick with them long enough.

We've had over 60 instances of stocks losing 5% or more. We've had a couple dozen corrections where they went down 10 or 20%. And just in the past few years, we've had two severe bear markets where stocks lost 20% or more. And

Over time, the markets have always overcome that and delivered ample returns for people who could stick with it. However, it's not a guarantee. And ultimately, if you try to force yourself to be the kind of investor you're not, you might end up worse off than

People who really feel they need to sleep well at night should listen to that intuition because if you compel yourself against your own gut to stick with the market during times that look tough, when times that actually feel tough come along, you may get shaken out.

So having a little bit higher allocation to cash or bonds might not be a bad thing for someone who is inclined to get spooked out of the market. I wanted to ask you about a hindsight bias. What is it and how should we be thinking about it as investors?

So hindsight bias is a fallacy of human reasoning. It essentially trains us to think after the fact that what did happen is what we predicted would happen. And just think about presidential elections, for example.

People say things like, oh, I knew all along it would be a landslide or I knew all along it would be close. But if you go back and look at what they actually were saying before the election, they weren't saying that. And the advantage of what's just happened is

particularly in April and the rebound in May, is that it's so fresh in all of our minds, it's kind of hard to lie to ourselves. And it gives us a great opportunity to look back and say, what was I actually saying and thinking? Oh, I was actually saying and thinking this was almost the end of the world, and it's turned out not to be, at least so far. So maybe the lesson I should learn is

is not to be so certain about my forecasts. So thinking about investors like Michael,

What would you tell them to consider as they weigh their options and try to conquer this fear of getting in? I like to say if you must panic, panic slowly. Panic gradually. You know, maybe take one percentage point of your allocation to stocks and reduce that each month. And within a retirement account where you don't have immediate tax consequences, maybe

you can do that quite easily. And making gradual change, first of all, will make you feel better because you'll feel you're responding to the thing you're afraid of. But more importantly, it prevents you from overreacting to a fear you feel that ultimately doesn't turn out to be actual. And just to emphasize to those who are still sort of spooked, Jason,

Managing investments is just one part of an overall financial plan, but it's an important one nonetheless. I wonder, what would you say to someone about using the market to build wealth and this sense of security? So the thing to keep in mind is that

While there are no guarantees, and it is not actually true that if you hold stocks long enough, you're guaranteed to outperform all other assets, it's

A bet about probabilities. It's highly likely that you will do extremely well if you hold stocks for the long term. And the fact that the probability isn't 100%, I don't think should really discourage you from doing it. Just as it can rain on a day when the forecast is 100% sunshine, it

Stocks can disappoint people who hold them for decades at a time, but in the long run, it is a very high probability bet.

And putting most of your money in stocks, particularly when you're young and your labor income gives you a hedge against fluctuations in the value of your stock portfolio, is a good idea. It's the best bet for long-term investing, even if it's not quite a certain bet. That's Jason Zweig, columnist for WSJ's The Intelligent Investor. And that's it for your Money Briefing. Tomorrow.

Tomorrow, we'll have our weekly markets wrap up. What's news in markets? And then we'll be back on Monday. This episode was produced by Ariana Osborough. I'm your host, Julia Carpenter. Jessica Fenton and Michael LaValle wrote our theme music. Our supervising producer is Melanie Roy. Aisha Al-Muslim is our development producer. Scott Salloway and Chris Sensley are our deputy editors. And Falana Patterson is the Wall Street Journal's head of news audio. Thanks for listening.

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