Expert Warns Not To 'Chase Stocks' In FOMO-Fueled Market: 'Wise To Be Patient At This Point'

The current bull run in stock market, driven by fear of missing out (FOMO) and the excitement of artificial intelligence, may not be sustainable, according to an analyst at Main Street Research, Business Insider reports.

Market Volatility: Chief Investment Officer (C.I.O.) of Main Street, James Demmert, warns that the market’s rapid rise, fueled by the A.I. hype, is temporary.

“The recent market strength is being driven by FOMO (Fear of Missing Out) by both retail and institutional investors,” he said.

“We do not think the daily grind upward in the stock indexes is sustainable, largely amid the possibility of mixed earnings reports over the next few weeks and the possibility of yet another Fed rate hike. Rather than chase stocks at these levels, investors would be wise to be patient at this point and use any corrections as a buying opportunity,” he said.

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Up-coming Changes: Demmert thinks that the Federal Reserve might take a tougher approach at its policy meeting, which could lower stock prices. This is because the Fed is trying to calm down investors who are too excited about the market, which goes against the Fed’s plan to make financial conditions stricter.

Also, big tech companies like Alphabet (NASDAQ:GOOGL), Meta (NASDAQ:META), and Microsoft (NASDAQ:MSFT) are going to share their earnings for the last three months this week. This could make the A.I. sector weaker, as tech companies that have already shared their earnings have been “cautious” about what they expect in the future, says Demmert.

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