Speculation in risk-on assets has been ripe for the past few years. A lot of people went all in crypto, (meme) stocks, NFTs, you name it. Diamond hands, BTFD, HODLing and such have become part of everyday vocabulary. Some made a fortune. More lost a fortune. Even more made some and lost it afterwards. If you look at stats, more people than ever participate in stock markets and crypto than ever. Possible reasons are COVID as it left a lot of people sitting at home wondering what to do or just the easiness of trading through technology. I think there is more to it though.

I think young people are forced to be investors.

One of the most straight forward things talking personal finance is make money, spend less than what you made, save the difference for the future in a bank. Simple. But this has been a losing game for the past ~ 10 yrs. With real yields being negative, just saving wont do. You lose money. So what are your options – investing.

Cool, but in what?

Real estate comes to mind as it is an old asset class and is everywhere around us. It is high barrier, though. Most real estate assets are out of reach of the average young person with 20-100k savings. Also real estate is quite of a hassle.

Bonds are somewhat common investment but they have seen poor performance during at least the past 10 yrs too. Their real yields are also negative, just like the bank deposit, so it makes no sense to buy something that makes you surely poorer.

So what is left are stocks and the new kid in town - crypto. The only chance to beat inflation and have some chance in today’s financial world, is investing successfully into stocks or crypto. Note the word “successfully”. While people are “forced” into the trade, most lack basic financial education as that is not in the school curriculum so a lot of the “forced” traders have very low chances of success right at the start. And that is quite bad. What can be done, though? I see 2 things. (1) Make saving great again. This topic is deep and I don’t see it happening. World runs on credit and the game favors spenders/investors on credit (even taxes do) rather than savers. Changing the game is not easy task. The “great reset” may come later than most expect or not come at all in ones lifetime, (2) Financially educate people so they have slightly better chances at the game. That is a big task but easier than (1). And it shows promise. A bunch of Reddit folks almost forced one of the top hedge funds Melvin capital into bankruptcy. How? By learning the rules of the game and exploiting it. That was epic thing to witness.

So next time when you are tempted to baptize some young people on the internet for their irresponsible investments try to put yourself in their shoes and see why they do it. Some may be pure gamblers but many are just decent people forced into a trade.