Discover more from The Financial Formula Newsletter
Fad Investing: Buyer Beware
By Martin A. Federici, Jr., CEO of both MF Advisers, Inc. and MF Tax & Accounting, Inc.
Cryptocurrencies (especially these lately), marijuana stocks, meme stocks, penny stocks, and other such investing fads are often a bad bet for investors. Investing in companies that have proven track records, solid financial numbers, implement game-changing products/services, etc., is usually a wiser decision. The investment landscape is full of marketing mumbo-jumbo that can make any type of investment sound like a no-brainer, so it pays to be able to separate the facts from the fiction (and sometimes it’s even hard for many professional investors to do that). You can play the lottery, go to the casino, etc., if you want to take large risks that often do not pay off.
I’m not saying you can’t make money on some of these fad investments (it’s possible), but the odds are NOT in your favor. Prices can fluctuate wildly, and many investors just simply can’t stomach watching investments dive in value. Often, these “speculators” are only thinking about the upside (prices & values going up) and forgetting there might be a downside. If you’re going to even consider doing this type of speculative investing, limit it to no more than 5% of your total investable money and be prepared to lose 100% of that money.
Thanks for reading The Financial Formula newsletter! Subscribe for free to receive new posts and support my work.
It often pays to avoid these types of fad investments, since the reward/risk scenario for these is not favorable in the long term. Most successful investing is long-term in focus because anything can happen in the short-term. NOTE/DISCLOSURE: All investing involves some type of risk, so holding investments for the long-term does NOT guarantee that you will make money from those said investments.
Now that you’re armed with this knowledge, making quality investment choices for your portfolio, diversifying those investments, and taking calculated risks should be step one for most investors. And – if you need help doing this – let us know if you need a hand constructing the right portfolio for your financial goals. You’re welcome!
Find an experienced financial advisor who helps clients invest wisely, works for an RIA firm, earns his/her money from fees (NOT commissions), believes in having an abundance of quality investment choices for clients, and has the heart & demeanor of a teacher, NOT a salesperson, and chances are you’ve found the right financial advisor to help you prepare and plan for your goals.
For more information, please visit
About MF Advisers, Inc.
MF Advisers, Inc. is a full-service, fee-only RIA firm and fiduciary based in PA & FL specializing in 403(b)s, 529 college savings plans, wealth management, investment advice, and financial planning (including retirement planning).
With 25+ years of licensed experience, over 10 years of professional education, and an unwavering commitment to improving your financial situation, MF Advisers, Inc. is the advisory firm to best serve YOU.