FOMO, YOLO, RINO: The quirkiest catchphrases explaining the surprising buoyancy of the stock market and economy

• Experts have struggled to find textbook explanations for the surprising economic buoyancy and stock-market rally of 2023.
• Many commentators have instead turned to trendy catchphrases - such as FOMO and YOLO - to describe the behavior of investors and consumers.

Many market experts have been at a loss to explain this year's surprisingly buoyant trend in US stocks, despite a slew of signals that the economy may be headed for a recession. Even the Federal Reserve's aggressive interest-rate increases and a bout of banking turmoil failed to rein the equity market's momentum.

Given a lack of classic textbook explanations, many commentators have turned to a bunch of informal acronyms to reason the market trends — FOMO, YOLO, RINO are some of them.

The stock rally started early this year following the smashing debut of OpenAI's ChatGPT, which helped ignite a surge in investor excitement over tech shares. That helped boost the Nasdaq 100 by about 53% year-to-date, while the S&P 500 advanced about 24%.

But the market ebullience isn't just down to AI hype. Investors have been driven by a mix of FOMO — fear of missing out — as well as a sense of relief that a much-predicted recession never arrived.

At the same time, the US economy appears to be in surprisingly good shape. And it's down to YOLO consumers, according to Wharton professor Jeremy Siegel.

Here are some of the in-vogue catchwords that have been widely used to describe and explain market trends in 2023.

FOMO

ChatGPT's overnight success sent investors rushing to buy into companies perceived as being well positioned to benefit from the AI revolution. The buying frenzy in turn spurred even traders who were on the sidelines to jump on the AI train, giving rise to a fear-of-missing-out rally.

"I think momentum and fear of missing out on gains can take the market higher over the short run," Siegel said in a weekly WisdomTree commentary in July.

Whether it can last is a key question.

"How long can such optimism or exuberance in the "AI bandwagon" continue? If we argue that it is more heavily driven by the liquidity factor it implies that such FOMO behaviour can morph into a mania that can be severely out of synch with economic realities akin to the prior boom-bust cycles of similar high technology advancement narratives," OANDA analyst Kelvin Wong wrote in a blog in June.

RINO

Move over, bulls and bears. A new variety of animal spirit may be driving the market now. According to a new acronym coined by Goldman Sachs, what we have in place is a RINO rally.

"Developed economies continue to surprise positively. Inflation is cooling down and a soft landing now looks like a plausible outcome. This has led to a new acronym (courtesy of Goldman): the "Recession In Name Only" (R.I.N.O)," analysts at the boutique Swiss bank SYZ wrote in a note.

It appears to suggest that the much-expected US recession has remained just a hypothesis and not a reality, given how resilient the economy has shown itself to be. And that's a cheerful enough situation for traders to pile into stocks.

TINA and TARA

Other ideas that have had some influence on the market in 2023 include TINA (there is no alternative) and TARA (there are reasonable alternatives) sentiments, per the Wall Street Journal.

The first argues that investors should hold on to stocks — because even if they underwhelm, there's no alternative asset class that would offer better returns. Meanwhile, TARA promotes the opposite – there are better assets to invest in compared to stocks.

YOLO

A new group of spenders are keeping the economy afloat, according to Siegel, despite high interest rates and fears of recession.

"The economy looks like it is progressing smoothly, with a resilient consumer impervious to the impact of higher borrowing costs. It is the 'YOLO' (you only live once) consumer out traveling and enjoying the summer," he wrote in a separate weekly WisdomTree commentary.

Higher rates typically encourage saving over spending, but the opposite is happening in the US — even after the Federal Reserve raised benchmark borrowing costs by 500 basis points over the five quarters.

This article was originally published on July 23, 2023.