The Banter-
Stop! Step back! Proceed
“An investment in knowledge pays the best interest.” — Benjamin Franklin
About this time last year I wrote an article about how the Financial markets were being manipulated. This was during the Crypto craze when FOMO(Fear Of Missing Out) reigned supreme. At this time last year the markets were going crazy. All over the Place. And this wasn’t just in Crypto, it had extended to all the other assets like stocks. Lots of pumps and dumps were happening around. Almost all the young people were throwing their money into the assets with the hopes of making some quick bucks. This all stemmed from a few facts and no one wanted to miss out when “History repeated itself” because history repeats itself, right? Wrong? See this time history wasn’t repeating itself but history was being made. In a way history was being made.
Back in the early 2010s when Bitcoin first came out a lot people missed out on the opportunity because it was a new phenomenon. People are scared of things they don’t know. Almost ten years later and we are still learning about Crypto and its supposed usefulness. So when a few new cryptos emerged in the market with the promise of “taking you to the moon” everyone got excited and jumped on that train especially after a few influential individuals hyped the crypto on their social media platforms. Young and old people went crazy and put their earnings, life savings and every single cent into the ‘asset’ and a few reaped but the majority lost big. A lot of tears followed and we are back to step one. Then GameStop stock followed. I didn’t fully agree with the means with which this stock was being thrown around but I did agree with the reason why. A hedge fund was trying to short a dying company’s stock and the laymen came in to the rescue and boy oh boy did the Hedge fund suffer (This was the beautiful part). But just as fast as it had come up did it go down and again a few individuals managed to reap big but quite a lot suffered. Again, tears followed.
These two examples show the effect of FOMO. In a race to try and be among the few who reap big most of the population ends up being part of the group that loses big. It’s all about the changing of pockets. When money leaves one pocket it’s definitely going to end up in another pocket. It all comes down to greed really. Last year when I wrote about the Financial markets I talked about how the Big players tend to mess up with the Financial markets in order to achieve those insatiable appetites of theirs. Now this could be true. Or not. It doesn’t matter really. It all comes down to what the small players do. Most of the population take the bait and when the hook is yanked there’s nothing left to do other than cry. I feel that majority of retail investors lack the education on how the Financial markets operate and this lack of education is what’s most detrimental. Forget about manipulation and all that, lack of education is the single most dangerous thing that can happen to a retail investor. Am not talking about the formal knowledge that you get in the class. No, am talking about the simple knowledge of how the financial markets work. Just like learning a new language or a new skill, investing in the Financial markets requires a lot of dedication, information, focus and study. Nothing comes on impulse and the hopes of winning big by chance should be last thing on a retail investor’s mind. This isn’t a lottery. This is sweat and blood. Figuratively speaking.
So next time you want to invest in that amazing new Crypto you just saw on your social media platform or heard someone talking on the bus, step back and ask yourself, am I willing and ready to lose this money. If the answer is no then just take your money and figure a way to put it to useful use. Because investing is all about the risks. In fact when you invest, be prepared to lose everything and then, only then, should you go ahead and make that investment. If you’ve got bills to settle, rent to pay, et cetera. Don’t invest that money. I repeat DONT INVEST THAT MONEY
