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To investors,
America has become a society of gamblers.
You can see this everywhere you look. Zero-day options are dominating public markets. Meme coins are bought and sold like 1980’s boiler room penny stocks. Major sport leagues are integrating sports betting into every corner of their operations.
Risk taking might as well be the 28th amendment to the US Constitution at this point.
This is what happens when a nation’s currency is being destroyed. People continue to fall behind financially and the wealth inequality gap widens. Rather than seeing a path to financial security, the average person loses hope.
There is no path to a brighter future.
Once hope is lost, the gambler’s mindset takes over. So what if they lose a little money on a 100:1 odds bet? The alternative is a life of debt and financial pressure.
Gambling is the best of two bad choices — at least the individual feels a degree of agency when selecting which bet to make. This is insane behavior when viewed through a logical lens, but it makes complete sense when you view it through human psychology.
Gambling gives people hope in a broken economy.
You may not think that the US economy is broken, but the average American would disagree. It is now less expensive to rent than purchase in all 50 major metros. Citizens owe more than $1.1 trillion on credit card balances. More than 43 million Americans have federal student loan debt, with the average balance being more than $37,000.
The US dollar has lost 25% of its purchase power since January 2020. For every $1 someone had 4 years ago, they can only buy $0.75 worth of goods today.
Given these facts, gambling doesn’t seem so illogical.
There are only two paths to fixing the problem. Either the United States figures out how to stop the accelerated debasement of the currency, which would allow citizens to gain restored confidence in the protection of their hard-earned economic value, or citizens will have to resist the urge to gamble and instead seek out alternative assets that help them outperform the inflation they are experiencing.
It is hard to tell someone to buy the S&P 500 when they feel like they have to find 10x investment opportunities to stay ahead.
Singles and doubles have created many millionaires. Home run swings lead to many strike outs. But this data doesn’t matter when people have lost hope. They need the light at the end of the tunnel, which is being shined brightest today by zero-day options, meme coins, and sports betting.
Many of us may not agree with it. We must acknowledge what is happening though.
The future damage created by this development is hard to comprehend. An entire generation is growing up in a different regime and it is unlikely they can be coaxed back into value investing, dollar-cost averaging, and other timeless investing principles.
YOLO and FOMO rule the day. Such a sad reality.
Hope you all have a great day. I’ll talk to everyone tomorrow.
-Anthony Pompliano
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John Arnold is the Principal at Ten31, a bitcoin focused investment platform.
In this conversation, we talk about the total addressable market for bitcoin, what that means for financial returns, where to place capital, products, services, industries that will get built around bitcoin, and more.
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