Meme Stock and Cryptocurrency Investing: Too Much Fun?
“I think all the SHILLS and FOMO got to me – I’m all in at this point! Just going to ignore the FUD and HODL! DIAMOND HANDS, baby! Let’s hope this thing MOONS!”***
If you have no idea what that means and you’re rushing to Google Translate to understand – don’t worry, I’m just speaking the language commonly used by cryptocurrency and DIY investors on platforms like Twitter, Reddit, and TikTok.
Today’s young (and not-so-young) DIY investors have embraced investing in their own way and some have even invented their own lingo to go along with it. There’s no denying the new vernacular, along with the online communities who coined slang terms like ’FUD’ and ‘HODL,’ definitely put a fun spin on investing.
Having fun while doing something is usually not a bad thing. But when it comes to investing, fun shouldn’t be the first word that comes to mind.
Investing isn’t all fun and games
It’s a good idea to remind yourself that investing shouldn’t be treated as a game to begin with. Investing these days (and some of you will agree from experience), can sometimes seem fun because it feels like a game, especially when investing in meme stocks or cryptocurrency. Many investing apps have the look and feel of a video game, with features like instant deposits and withdrawals, colourful graphics and sound effects, and 24/7 accessibility. And while they can make investing really fun, investing does have real life consequences—good and bad.
On the positive side, a savvy investor can profit—you might even know someone, or know someone who knows someone, who has made a lot of money. But for every person who has ‘won,’ it could be ‘game over’ for many others.
How to not get caught up in the fun:
While it may sound counterintuitive, if you’re having too much fun investing, whether it’s in traditional stocks, crypto, or watching your meme stocks MOON, maybe it’s time to get to get back down to Earth.
- Get back to basics, or learn the basics if you never have. There is no substitute for a good foundational understanding of the principles of investing.
- Write down your short and long term investing goals.
- Determine your risk tolerance. Do you know what you can afford to lose?
- Understand what you’re actually investing in (this is especially important for crypto and meme stocks).
- Have an investing plan, and stick to it.
While the above is not an exhaustive list of what you can do to take your investment strategy more seriously, and certainly not very fun, it is a good place to start. You can find other tips for making sound investment decisions and becoming moneysmart at moneysmartmanitoba.ca
Admittedly, there’s no way to reduce all the risks associated with investing, especially for certain investments that are inherently risky such as crypto or meme stocks. But, if you follow all of the above advice, then just maybe, you can avoid becoming a BAG HOLDER.
- FOMO means the “fear of missing out”. When someone experiences FOMO, they’re feeling anxiety because others are making money on an investment’s price movement and they’re not.
- FUD means “fear, uncertainty, and doubt”. FUD refers to a general pessimism about a particular asset or market.
- HODL, originally a misspelling on the word “hold” that stuck around, has since taken on the meaning “hold on for dear life”. HODL is a term used to encourage an investor to not sell an investment.
- DIAMOND HANDS when someone has Diamond Hands, it means that they won’t sell an investment no matter what. Diamond Hands are similar to HODL.
- MOONINGrefers to the price of a certain asset rising rapidly.
- SHILLSrefers to people who talk favorably about an investment because they have some underlying financial interest.
- BAG HOLDER refers to an investor who holds an investment that ends up decreasing in value until it’s worthless.
~ MFSA Staff Writer
May 25, 2022