Crypto's impact on misleading the youth

"Invest in gold, max out your other IRA or 401k and build wealth for your children" has been the average sentiment on investment for the past few decades. Don't get me wrong, I value investing in properly established companies, I hold a diversified stocks and metals portfolio and hope to purchase my first rental property in the next decade. I advocate for responsible and consistent investments for extended periods of time and have un-ironically been nicknamed "the stocks kid" by a few friends. But the slow-and-steady approach to investing is proving itself to be too boring for many younger investors. Cryptocurrencies have been discussed boldly for the past few years and offer a new thrilling way to invest. Whilst the conversation on if cryptocurrencies belong in anyone's portfolio is completely separate, I have major concerns about the way specific coins impact society's opinion on investing.

It is an indubitable fact that, on average, the best strategy for growing wealth has been hold a week diversified portfolio in which you invest in regularly for a long period of time. This advice simply works, it harnesses the power of risk mitigation, leverages compound interests and more or less promises success. 20 years ago The average 20 year old would have approached investing exactly like this but times have clearly changed. Crypto has dug it's heel in the ground and demands debate, certain coins target the narrative. These concerning coins generally have a few tell-tale qualities; a low market cap, a cult like community and an appealing mascot.

Examples of coins that fit these qualities are TrueFlip, Shiba Inu, my personal favorite panda coin and most notably, Doge Coin. I would like to focus in on Doge coin and why it sent the wrong message about investing. In April, 2021, Doge coin developed a very strong sentiment around it through memes and simple FOMO. The price jumped from $0.06 a piece to over $0.74 per coin in a matter 26 days. Let's be clear, Doge coin was not similar to an undervalued stock finding support, it had no financial foundation and was made as a literal joke. The price went up due to a simple chain of event and worked on a basis of supply and demand; a conversation sparked about the silly nature of the coin, people bought it causing more people to buy it due to rising prices, which caused even more people to buy it, further accelerating the parabolic "growth" of this coin. Somewhere in this world a 13 year old with a bright financial future watched a TikTok on Doge coin, decided to buy in at the peak and lost hundreds of dollars. This literal child now has a tinted relationship with investing because the attractive mascots and cult-like following lured him into blowing his cash on a coin he did little research on. Another scenario, one I consider more dangerous is another imaginary 13 year old who heard about doge coin early and made a 10x return on his investment, flipping $500 into $5,000. High off the euphoric feeling of a successful trade, he purchases another coin with his new found loot which too runs parabolically. His initial investment of $500 is now worth over $10,000 and he is deeply hooked on this method of investing. Whilst I would congratulate him on his prosperity I would be seriously concerned for his future. He is much more likely to indulge in day trading and would find safe investments like $SPY which might steer him into being a reckless investor.

Shiny new coins with cute mascots are nothing more than virtual lottery tickets. They open the gates for gambling and teach unhealthy investing habits to anyone involved. It is important to encourage safe investing and understand that many coins are simple games.

Trade safe and GLTA

Archit Joshi