The "crazy" 2021 has changed our investment concepts and behaviors in this way
This article comes fromBloombergThis article comes from
, the original author: Michael P. Regan, compiled by Odaily translator Katie Ku.
2021 is a year of cultural integration, and modern financial culture, image culture, fashion trend culture, etc. are all merging. American football superstar Tom Brady, with FTX, and actor Matt Damon, with Crypto.com, dived into cryptocurrency trading. Digital tokens are beginning to be labeled as symbols of wealth. The cartoon image of the boring ape is sold at a high price in the NFT market, all of which are unimaginable in 2020.
Of course, this great integration has not been smooth sailing. Small individual investors have teamed up to buy shares of GameStop and AMC Entertainment Holdings Inc., aiming to bankrupt hedge funds that have shorted the two companies. Many Wall Street professionals are as confused by the rise of the new crypto market as anyone else.
Everyone seems to want to get in, from high school kids trading via Zoom software on their phones to adults who missed out on dot-com-era fortunes and are determined not to let another bubble slip past them. The number of new traders is too great to count. However, in terms of metrics, Coinbase alone has grown from 32 million certified users in early 2019 to 73 million in September this year.
"Investors are most likely to focus on more volatile products, including those that have received a lot of media attention, such as GameStop, AMC Entertainment Holdings, or cryptocurrencies, or that investors believe have an opportunity to gain exposure in the short to medium term," Cerulli said. sub-themes or sectors with outsized growth.” Not so long ago, financial regulators worried that too many investors turning to index funds would distort markets. Today, we wonder whether joke-themed cryptocurrencies such as Dogecoin create systemic financial risks.It's easy to attribute all this to the excesses of emotions that have long driven markets: greed and fear. In this case, people are more afraid of missing out. However, there is also
Another emotion is at play, obsession. The world of crypto and non-crypto technologies has rapidly evolved into a bottomless rabbit hole of innovation and intellectual allure. For meme stock traders, they are fascinated by the intricacies of the market plumbing and how professional traders operate. Not only do you have to figure out what AMC Entertainment Holdings' business model is, but you also have to figure out whether your team can outsmart a rival money manager.
The phrase "Proof of Work," which refers to the computational work required to run a blockchain network like Bitcoin, can also be applied to the motivation of this new type of trader. Meaning if you work hard enough, hard enough to read white papers, listen to podcasts, watch YouTube videos, learn about social media, learn about technology, or just refresh the trading software that’s constantly on your phone, you can take your time.
During the new crown, new virtual communities have formed. In this fusion of finance and pop culture, these communities meet in Reddit forums, Twitter trending topics, Discord and Slack windows, and even simple text messages. I have a group of friends who have been playing poker on Friday nights for years. They recently met with an NFT expert on Zoom to discuss how to turn some of their crypto-token wealth into monetized JPEG files.
Active members of these communities include crypto stalwarts like actor Tom Brady, and the WallStreetBets Reddit “Degenerates” group has 11.3 million users and counting. You'll have to keep an eye out for the wacky ape-like profile that pops up, it could be part of the Ape Army marching in for AMC Entertainment Holdings, or the Bored Ape Yacht Club's NFT project , which showcased one of the hottest digital status symbols of the year.The value of many of these assets derives entirely from the power and influence of their surrounding communities. Especially in crypto projects, where there is often no underlying cash flow or real underlying economics at all, and no need for any blockchain innovation, the barrier to entry is virtually non-existent.Want to create your own meme coin? Just copy the last open source code, give it a name, make a few tweaks, and it's ready to go.The price of the token will depend on how well promoted it is by its community on social media.
Attract the interest of Elon Musk or other influential people and you could be a millionaire in no time.
It might sound crazy, but it exists. Whether it's a bull market or a bear market, the incredible growth and influence of online communities, and the fascination they create, are the real wealth of the financial world in 2021 and beyond. Some analysts and writers refer to this phenomenon as "identity investing." Chuck McNaughton, senior wealth advisor at ScotiaMcLeod, said this year: "In my experience, all investors behave in a way that is broadly consistent with their basic personality."
He mostly talks about stocks and bonds and their respective risk tolerances. But some investors will now identify with a cartoon image of Shiba, or an image of an ape, and this is our 2021. Steve Kurz, head of global asset management at cryptocurrency investment firm Galaxy Digital, told me in an interview last November, “You wear this badge, and as this network grows, you own a piece of it. We have to imagine an identity investment that has value.” world."
Who knows which of these new assets will end up being worth owning, just as Apple and Amazon were worth holding during and after the dot-com bust, when the Nasdaq Composite plummeted nearly 80%. You’re seeing in the crypto boom what the believers call Web3, a whole new future internet built around the blockchain technology that’s powering all these tokens and art projects. "Like Facebook, we don't know what its economic model or valuation is going to look like long after its network has grown and grown, and we may just be in the early days of some of it," Kurz said. It's stupid."
Anyone with a retinoid avatar will surely tell you that if you ignore the future, you won't get there. But at this point, it's foolish to ignore the lessons of the past, and you don't even have to go back to the dotcom bubble. Meme stocks and cryptocurrencies are not a continuously inflating bubble, but a series of waves that have inflated and hit the shore, wave after wave. Cathie Wood's ARK Innovation ETF fund, known for its heavy holdings in Tesla, took off in 2020 and reached its peak in February this year. It has fallen nearly 40% from its high point. Shares of AMC Entertainment Holdings are down more than 60% from levels hit this summer. Dogecoin has been eclipsed with the rise of NFT.
Still, gains in the overall market may have eased a lot of investor distress. "There's a new generation of investors coming into the market who haven't experienced the big losses of the past," said Christine Benz, director of personal finance at fund research firm Morningstar. But even stocks like the S&P 500 are highly valued, and fund managers The giant Vanguard Group told investors that return expectations for the next 10 years are also much lower. Benz recalled what happened to many traders after the technology stock crash in 2000: "People not only gave up on a certain stock, but also gave up on their own ideas as individual stock investors."
