MENU

Don’t suffer from FONGO

I’m sure every reader has heard of ‘FOMO’, the Fear Of Missing Out. It can make you invest in shares that have skyrocketed in price, but you don’t want to miss out on even more gains. It can make you refresh your phone wanting updates on the ASX, Facebook or Instagram.

However, I recently came across a fun, new acronym: FONGO. It stands for Fear Of Not Getting Out.

In an article by Chris Kohler for Domain Holdings Australia Limited (ASX: DHG), AMP Limited (ASX: AMP) Capital chief economist Shane Oliver said that many investors may look to sell to avoid suffering from a several-year property downturn.

He thinks that prices in Sydney and Melbourne could fall another 10% to 12%.

Worrying about property falls and selling reveals a number of things to me. Firstly, any investors who are selling weren’t buying for the long-term. Seemingly they were just speculating that prices always go up over short periods of time.

Property prices falling could actually be a good thing for people moving. Consider this: if they pay a percentage-of-sale real estate agent fee, then the dollar amount paid to the agent will be smaller and the stamp duty of their next house purchase will be smaller. Most importantly, the property they’re moving to could fall 0.5% or 1% in price between the time they sell their house and buy the new one. In a rising market the mover’s new property could be 1% higher during the switch – which could amount to many thousands of dollars!

FONGO can also be applied to shares. If you buy a share at $5 and five years later it reaches $10, does it matter what happens in between? Even if in the first few months it falls to $4 or $3.50? As long as your investment thesis hasn’t changed that share has likely become even better value. That could be the time to top up on those shares.

Foolish takeaway

It’s important to not let fear dictate your financial decisions. Nearly every finance choice should executed thinking logically not emotionally. Who knows what property prices will do next? People fearing property price falls can self-perpetuate into prices falling.

One top ASX business you don't want to miss out on is this top share because it is predicting profit growth of at least 30% this year has a PEG ratio of less than 1.

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.