FOMO, Fear, and XEQT: How to Invest When the Market Feels Scary

I almost sold everything in March 2020.

The market had cratered. My XEQT position was down over 25%. Every headline screamed about economic collapse. My coworker had already gone to cash. My dad called to ask if I should “get out before it gets worse.”

I remember sitting on the couch at 11 PM, staring at my Wealthsimple account, thumb hovering over the sell button. My stomach was in knots. Every fibre of my being said run.

I did not sell. And that single non-decision – doing literally nothing – ended up being one of the best financial moves of my life. Within 18 months, my portfolio had not only recovered but hit all-time highs.

If you have ever felt paralyzed by market fear, or if you have ever panic-bought a meme stock because everyone else was getting rich, this post is for you. Let us talk about the two emotions that destroy more wealth than any market crash ever could: FOMO and Fear.

1. The Two Enemies Living in Your Brain

Every investor battles two opposing forces:

FOMO (Fear of Missing Out): That itch you feel when your coworker brags about their 200% return on some AI stock. That voice saying “everyone is getting rich except me.” It pushes you to chase returns, buy at peaks, and abandon your strategy for the hot thing.

Fear: That sick feeling when markets drop. That panic when you see red numbers. The conviction that this time it is different and the market will never recover. It pushes you to sell low, hoard cash, and avoid investing altogether.

Here is the cruel irony: FOMO and fear take turns destroying your wealth.

• FOMO makes you buy high (chasing returns)
• Fear makes you sell low (panic selling)
• Together, they create the classic “buy high, sell low” cycle that devastates amateur investors

The average investor earns significantly less than the market average, not because they pick bad investments, but because they let emotions drive their buying and selling decisions. Studies from Dalbar consistently show that the average equity investor underperforms the S&P 500 by 3-4% annually over 20-year periods – almost entirely due to poor timing driven by emotions.

2. The Psychology Behind Market Panic

You are not irrational for feeling fear during market downturns. Your brain is literally wired for it. Here are the cognitive biases working against you:

Loss Aversion

Psychologists Kahneman and Tversky discovered that losing $100 feels roughly twice as painful as gaining $100 feels good. This is why a 10% portfolio drop feels catastrophic, even though a 10% gain barely registers. Your brain weights losses more heavily than gains.

Recency Bias

Whatever happened most recently feels like it will keep happening forever. Market dropped this week? Your brain thinks it will drop forever. Market rallied for six months? Your brain thinks it will keep going up forever. Both are wrong.

Herd Mentality

When everyone around you is selling, it feels insane to hold. When everyone is buying crypto, it feels foolish to stick with boring index funds. Humans evolved to follow the group – it kept us alive on the savannah. But in investing, the herd is almost always late and usually wrong.

Anchoring

If you bought XEQT at $30 and it drops to $25, you are “anchored” to the $30 price. It feels like a loss even though the long-term trajectory is what matters. Anchoring to short-term prices blinds you to long-term trends.

Understanding these biases does not make you immune to them. But knowing they exist gives you a fighting chance at overriding them. And choosing the right investment – one that removes as many emotional triggers as possible – gives you an even better chance.

3. What Actually Happens When You Panic-Sell vs Hold

Let us put real numbers to this. Here is what happens to a $50,000 XEQT portfolio through a major market correction, comparing two investors:

Investor A: Panic-sells during the crash, waits for the market to “stabilize,” then buys back in.

Investor B: Does absolutely nothing. Keeps holding. Maybe stops checking their phone.

Investor A lost $11,300 – not because the market crashed, but because they reacted to the crash. The market recovered just fine. Their portfolio did not, because they locked in losses and missed the recovery.

This is the real cost of panic selling. And it plays out the same way every single time. If you want to see the full historical picture, check out how XEQT performs during recessions.

4. Why XEQT Is Built for Emotional Investors

I genuinely believe that XEQT is one of the best investments for people who struggle with investing emotions. Here is why:

It removes the “did I pick the wrong stock?” anxiety. When you own a single stock and it drops, you question your judgment. When you own 12,000 stocks through XEQT, a single company tanking does not matter. You own the whole market.

It removes the “should I rebalance?” stress. XEQT automatically rebalances across US, Canadian, international, and emerging markets. You never have to decide whether you have too much US exposure or not enough Canadian content.

It removes the “is this the right fund?” doubt. With thousands of ETFs to choose from, analysis paralysis is real. XEQT is one fund. One ticker. Done. No second-guessing needed.

It removes the temptation to tinker. When your portfolio is one fund, there is nothing to optimize, rebalance, or adjust. The less you can fiddle with, the less damage your emotions can do.

5. Seven Practical Strategies to Manage Investing Anxiety

Knowing you should not panic is easy. Actually not panicking is hard. Here are seven strategies that help:

1. Automate Everything

Set up automatic deposits and auto-invest into XEQT on Wealthsimple. When investing happens automatically, there is no decision point where fear can intervene. You cannot panic-sell if you are not even thinking about your portfolio.

2. Delete the App (Temporarily)

I know this sounds extreme, but during the 2020 crash, I deleted Wealthsimple from my phone for two weeks. When I re-downloaded it, the worst of the storm had passed and my portfolio was already recovering. Out of sight, out of mind. For more on this, read how to stop checking your XEQT portfolio every day.

3. Zoom Out

Pull up a chart of the global stock market over the past 100 years. See all those dips? The Great Depression? The 2008 financial crisis? COVID? They are barely visible blips on a long-term upward trajectory. Every single crash in history was followed by a recovery that reached new highs.

4. Write Down Your Plan

Before the next crash, write this on a sticky note and put it on your monitor: “Markets crash. I do not sell. I keep buying. This is the plan.” Having a pre-written plan removes the need to make decisions during emotional moments.

5. Talk to Nobody About Short-Term Moves

Your coworker who “sold before the crash” is either lying, lucky, or will buy back in too late. Stock tips from friends and coworkers are almost always harmful. Nod politely and change the subject.

6. Remember That Crashes Are Sales

Would you panic if your favourite grocery store had a 30% off sale? No. You would stock up. A market crash is the exact same thing – stocks are on sale. If you are in the accumulation phase of your investing life (still working and buying), crashes are good for you. You get more XEQT shares for the same money.

7. Focus on What You Can Control

You cannot control the market. You can control your savings rate, your fund choice, your automation setup, and whether you log in to your brokerage account during a crisis. Focus on those things.

6. Common Fear-Based Mistakes (and What to Do Instead)

Read these carefully. If you see yourself in any of these rows, you are not alone. I have personally made at least four of these mistakes before finding my way to a simple, automated XEQT strategy. For more on this, read about the 7 investing mistakes XEQT helped me stop making.

7. The “Sleep at Night” Test

Here is a simple framework I use to evaluate any investment: Can I buy this and not lose sleep when it drops 30%?

For individual stocks, the answer is almost always no. If I put $10,000 into a single company and it drops 30%, I am going to question everything. Was my analysis wrong? Is the company going bankrupt? Should I sell before it gets worse?

For XEQT, the answer is yes. If XEQT drops 30%, it means the entire global stock market has dropped 30%. That has happened before (2008, 2020) and the market has always recovered. I do not need to worry about XEQT going bankrupt. I do not need to worry about a single CEO making bad decisions. The global economy keeps growing, and XEQT goes with it.

XEQT passes the sleep test. Very few individual investments can say the same.

8. How to Invest Your First Dollar When You Are Scared

If you are reading this and you have not started investing yet because the whole thing feels overwhelming and scary, let me simplify it to the absolute minimum:

1. Open a Wealthsimple TFSA. It takes 15 minutes. You need your SIN and a piece of ID.
2. Deposit $50. Not $5,000. Not $500. Fifty dollars. An amount that will not make you lose sleep even if it vanishes.
3. Buy XEQT. One tap. One fund. Done.
4. Wait one month. See how it feels. Check it once. Notice that the world did not end.
5. Increase your amount when you are comfortable.

That is it. You do not need to understand P/E ratios. You do not need to read the Financial Post. You do not need to know what “quantitative tightening” means. You just need to start.

The scariest part of investing is the first purchase. After that, it gets easier. And once you automate it, it becomes completely invisible. The cost of waiting is enormous – do not let fear rob you of decades of compound growth.

9. The Market Rewards Patience

Let me leave you with this.

Every generation of investors has faced a moment where it felt like the sky was falling. The Great Depression. The oil crisis. Black Monday. The dot-com bust. 9/11. The 2008 financial crisis. COVID-19. Trade wars.

Every single time, the investors who did nothing – who held their diversified portfolios, who kept buying through the fear, who ignored the noise – came out ahead.

Not because they were smarter. Not because they had better information. But because they understood something that most people never learn: the market rewards patience, and it punishes panic.

XEQT makes patience easier. It is one fund, globally diversified, automatically rebalanced, dirt cheap, and available commission-free. It is designed for people who want to build wealth without turning investing into a full-time job or an emotional rollercoaster.

You do not need to be fearless to invest. You just need to be patient. And XEQT makes patience a whole lot easier.

Related Reading

• How to Stop Checking Your XEQT Portfolio Every Day – Practical tips for reducing portfolio anxiety
• 7 Investing Mistakes XEQT Helped Me Stop Making – Common traps and how to avoid them
• The Real Cost of Waiting to Invest – Why starting scared beats not starting at all
• Why Your Coworkers’ Stock Tips Are Costing You Money – How social pressure leads to bad investing decisions
• How Does XEQT Perform During Recessions? – Historical data on market recoveries
• Dollar-Cost Averaging into XEQT – The strategy that takes emotion out of investing