Two Downer Notes For Popular Investments – Forbes

PARIS, FRANCE – FEBRUARY 26: In this photo illustration, the Coinbase cryptocurrency exchange logo … [+] (C) is seen on the screen of an iPhone on February 26, 2021 in Paris, France. Cryptocurrency trading platform Coinbase has filed for registration with the SEC on Thursday for an IPO via direct listing on the Nasdaq and will likely be the largest IPO of the year. Coinbase reported $ 1.28 billion in revenue in 2020 (+ 140% year on year), for net profit of $ 320 million. (Photo illustration by Chesnot/Getty Images)

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There’s always investing advice aplenty on social media. What people forget is that often pushing the suggestion are either personal financial interest — they want their investments in something to go up from more popular demand — or belief in what they’ve heard via rumor over the years.

Here are two areas where you ought to be careful especially given recent information and lessons. Not that all investments in any of them are bad, but there are plenty of reasons to tread carefully and only put invest what you can afford to lose.

Crypto

There are people who have made fortunes in trading cryptoassets. Then again, there are many who have lost their shirts in the recent luna/Terra meltdown, as MSN reported:

“The coin’s price fell from $116 in April to a fraction of a penny at the time of writing. Such an implosion has been seen in small-cap memecoins in the past, but never for something the size of luna, which had a market cap of over $40 billion just last month.”

Some extreme fans of cryptocurrency like to say that it’s the future of money and that fiat currencies—the ones like the U.S. dollar, Euro, Japanese yen, and British pound—have no inherent value. And that is correct. Value is always matter of perception, whether talking of aper money, gold bullion, or the electrons captured by a blockchain.

But gold, whether rationally or not, is highly prized. Fiat money rest on massive economies and, ultimately, the collective resources of nations. There is long-established trust, even though sovereign currencies can and have collapsed. But it takes a lot for that to happen.

Cryptocurrencies can be wildly volatile. Bitcoin
BTC
is down by more than half of its heady pricing in November 2021. Was it overvalued then? Maybe. Undervalued now? Maybe. But it’s hard to tie to a solid value because it, as other cryptocurrencies, depends on people continuing to buy to push the price up.

As Tracy Alloway wrote in Bloomberg, “Many of these tokens derive their value from an influx …….

Source: https://www.forbes.com/sites/eriksherman/2022/05/26/two-downer-notes-for-popular-investments/