Ever heard of “moonshot” investing? The mindset on financial markets is changing, and this has much to do with retail investors entering the market during Covid. These are not always financially literate investors, which in extreme cases causes major market disruptions, just think of the GameStop stock blowing up last year. The Financial Times dubs them “F*ck it investors”, so the question is: will these investors see opportunities in emerging tech, and will it affect that market?
Source:https://investorplace.com/2021/11/2-more-stocks-set-to-2x-5x-10x-in-2022/
First, let’s talk about why these retail investors are actually entering the market. Financial outlook for the younger generation is not great to say the least. For the first time in recent history, youngsters will not be able to outearn their parents through traditional investments and saving. That is why they are looking for more lucrative ways to invest, because why play safe to earn less when there is a small chance you could earn big? The thought process is quite elementary: if I would have bought one bitcoin in 2015, I could have sold it at its all time high for a price many times higher.
Expanding on the bitcoin example, we can see that this is a market where many retail investors see potential. And this seemed to have been a good investment, up until a few months ago when the market crashed. The belief in blockchain technology however is justified. It is a technology worth exploring, and worth investing in, although many investors are doing this for the wrong reasons. It is hard not to invest in it, since some crypto investors have seen their earnings skyrocket, yet where there are winners, there are also losers.
Source: https://financialit.net/news/trading-systems/what-difference-does-implied-volatility-make
What we see in general is that there is so much money available right now, yet investors have a hard time figuring out what to invest it in. Since the human mind is programmed to imitate behaviour, this might be the case with people mimicking each other’s investments. When too many people start doing this, without actually knowing what they invest in, a bubble may develop.
Perhaps other emerging technologies will follow the crypto trend. Currently the metaverse is being developed at a high pace, causing more people to engage in it. Maybe investors will lose interest in real life assets, and start investing in digital assets. How will this affect the economy, our markets, our life? Interesting times up ahead, that’s for sure!
Source: https://imgflip.com/memegenerator
