The FOMO Itch Framework
Scratch every small itch early so you never claw yourself raw at the top of the cycle.
- Difficulty
- Easy
- Time to result
- ~months to results
- Steps
- 5
- Confidence
- 92%
Leonard's answer to the index-fund-versus-individual-stocks debate is psychological, not mathematical. He accepts that 90-100% of people would do better simply buying the S&P 500 and never touching individual names — but argues the advice fails because humans are psychological animals. His model is an itch: ignore it and it intensifies. Miss Tesla, then miss Bitcoin in 2017, then miss it again in 2020, and by the time Dogecoin arrives you have four cycles of pent-up regret and you go all in with money you cannot afford to lose. His inversion: scratch every itch immediately with a small, deliberately losable amount. You will probably lose a little each time, but the total is far less than one capitulation trade — and after two or three rounds the lesson lands firsthand and the FOMO is cured permanently.
Origin
Leonard developed this framework in response to the most common question he gets: should people just buy the S&P 500? He agrees the index is right for almost everyone, but noticed the advice does not survive contact with human psychology. Rather than fight the urge, he built a mechanism that lets it burn itself out cheaply. He applies it to himself — his small Bitcoin position exists because of this framework, and having run the cycle he now reports no FOMO at all about NFTs or sports cards.
Core principles
- 01Suppressed FOMO compounds — each missed cycle raises the size of the eventual mistake.
- 02Small deliberate participation is cheaper than one large capitulation.
- 03Firsthand loss teaches what advice cannot.
- 04The goal is not to win the speculation, it is to cure yourself of needing to.
- 05Only stake what you are genuinely fine losing.
How to run it
- 1
Recognize FOMO as an itch, not a signal
The feeling that you are missing out is not information about the asset. It is an escalating physical urge that grows every cycle you refuse to address it.
Watch out Do not mistake intensity of FOMO for strength of conviction. They are unrelated.
- 2
Run the regret test to set the size
Ask yourself: would I be more upset that I didn't put money in and missed the upside, or more upset that I lost this money? The amount where you are clearly more upset about missing out than about losing is your position size.
Pro tip If $500 lost would not bother you but missing a 10x would, then $500 is the number.
- 3
Scratch it immediately and small
Put the small amount in as soon as the itch appears. Do not wait, do not size up, do not tell yourself you will catch the next one.
Watch out Never go all in. The whole point is that the cost of the lesson stays trivial.
- 4
Repeat across multiple cycles
Participate in each successive hype event with the same small stake. You will likely lose a bit each time, but the cumulative loss stays well below what a single pent-up capitulation would cost.
- 5
Let the firsthand lesson cure you
After two, three, or four rounds you conclude for yourself: this doesn't work. That conclusion, earned rather than told, permanently removes the FOMO.
Pro tip Once cured, you can hold your index position and watch every new mania go by without flinching.
In the wild
Leonard describes the failure path: you hear about Tesla and feel the itch but tell yourself you shouldn't. Bitcoin comes in 2017 — you miss it. 2020 comes around — you miss Bitcoin again. Now three or four opportunities have passed and the itch is unbearable. Dogecoin arrives and you go essentially all in, putting in far more than you should because you need to make up for everything you missed.
→ Almost everybody loses a large amount of money in that situation — the exact outcome the discipline was supposed to prevent.
Leonard holds a small Bitcoin position specifically because of this framework — he scratched the itch with a little money rather than nothing or everything. Having run the cycle, when NFTs and sports cards became the next mania, he felt no pull at all.
→ He reports he has cured himself of FOMO — he sits out NFTs and sports cards entirely, without the accumulating pressure that leads to a blow-up trade.
Common mistakes
White-knuckling through every cycle
Refusing to participate at all feels like discipline but is actually accumulation. Each suppressed itch raises the size of the eventual position when willpower finally breaks.
Sizing the scratch too large
If the amount hurts to lose, you have not scratched the itch — you have made a real bet, and losses at that size create new emotional distortions rather than dissolving them.
Treating the small position as a strategy
The small stake is medicine, not an investment thesis. Expect to lose it. If you start rationalizing it as a real allocation, you have re-entered the trap.
Is it for you?
Best for
Index-fund investors who intellectually know better but feel the pull of every new hype cycle and have not yet been burned enough to be immune.
Not ideal for
People with no financial cushion, compulsive gamblers for whom any participation escalates, or anyone who genuinely feels zero FOMO already.
From the transcript
“i have this framework that i've created that helps people deal with fomo which is what i just mentioned it's just fear of missing out…”
“that first time that you have a little itch scratch it put a little bit of money into it you don't don't go all in…”
“eventually once you've done this two three four times you realize you're like yeah this just doesn't work out like i'm not going to keep…”
“would i be more upset that i didn't put money into this and i missed out on the upside or would i be more upset…”
From the episode
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Robert Leonard