AAMA: Dot Com versus Dot Crypto: A Young Investor’s Take on The Millennial Investment Boom

Crypto is crashing again. Scott Rowe from AAMA sent this in to explore the ramifications. Enjoy.

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I’m 29 years old, work for a fundamentally-rooted investment advisory firm, and now have a heightened regard for the work financial advisors face in the years to come.

As a marketing professional I’m no portfolio manager. But with strong roots in the financial services industry, I’d like to think I have a core understanding of the markets, sound investment strategy, and the risks that come with investing in stocks, bonds, funds, and even coin. I might not be Warren Buffett, but I know enough to understand the risks of what I’m doing and how to manage some of that risk with prudent research.

2021 taught me what I didn’t know – That most of my peers are actively investing (outside of their 401(k)s) and that most of these younger investors have a blatant disregard for the fundamentals of investing.

“Are You in Dog Money?”

I was recently at an event with 12 people (outside and socially distanced of course), all late 20s and early 30s. And as we sat on a patio enjoying each other’s company the topic of investing arose with a humorous question – “Are you in dog money?”

Dogecoin, jokingly called dog money, was in nearly everyone’s portfolio. That was the first shock. The second was the way in which my friends discussed the currency—with complete certainty that the value of the cryptocurrency would rise, and by a lot.

In fact, this was how they approached most of their investments, which were heavily weighted in crypto entities, from currencies to platforms that facilitate the exchange of crypto currency.

The funny thing? Most of them were making a killing (this was prior to the May 19th drawdown). On the surface that sounds great. After all, isn’t that why we invest?

But taking a step back, I think that’s maybe the worst thing that could happen for a younger investor; akin to hitting it big on your first trip to the casino. It sets unrealistic expectations. It also leads to more trips to the casino, and we all know how that one plays out.

Riding High on a Bubble

As I sat back and listened to the spirited conversation of my fellow investors, all around the future promise of crypto currency, I couldn’t help but think about the Dot Com Bubble.

As a 9 year old in 2000, I obviously missed the Dot Com market meltdown. But as a history buff and team member of a fundamental investment strategist, I can see the parallels clearly.

The internet was new, exciting, and delivered the potential to change the way everyone works, learns, and plays. Crypto currencies are much the same. There’s great potential for the technology to change the way we buy, sell, and track things.

Risk in the Dot Com Bubble came from investors buying stake in companies with high levels of debt and a long, curvy, and unmapped road to profitability. Risk in crypto currencies is much the same, except the road to usefulness for the currency itself is intertwined with government and banking regulations, along with the mass buy in of average consumers. I think that road is much less developed than that of the Dot Com Bubble.

While we don’t need a history lesson in the Dot Com Bubble, noting the similarities in both risk and investor mindset is important. In both scenarios investors swarmed in droves to anything and everything related to the business segment, with little to no consideration of the fundamental value of the securities they’re buying. Earnings, cash flow, leadership experience—this is all foreign speak to my friends.

It’s the purest form of speculation, and it’s the air to the market’s soapy water. Again, I’m no Warren Buffet but this seems like ideal conditions for a bubble.

Generational Trouble for Advisors – More Than Digital Communications

The financial services industry has been inundated with articles about how to attract, sell, and speak with younger investors. That’s well and good. As a millennial investor, I want a financial advisor to understand how I want to communicate. But what if those investors don’t understand the fundamentals of investing?

I think in the financial services industry, we expect to have to help investors understand their risk tolerance, the value of a certain asset class mix, and why the fee they pay for financial advice is probably worth it. But the new breed of investor might be a harder sell.

They’re making money through pure speculation. Their financial advisor is Reddit, and their perception of acceptable gains is absolutely not sustainable. A 10% return isn’t a great outcome, it’s a total waste of time—after all, you can get 1000% in Dogecoin. They think a long hold is a quarter, and they are always looking for the next big short squeeze. They see investing as us (the retail investor) vs. them (wall street and financial institutions).

There’s a clear rift in the mindset of Millennial investors and the traditional advice offered by financial advisors—one that needs to be bridged.

Why Are Millennial Investors the Way They Are?

The key to addressing any problem is to understand its origin. I think we can look toward a few factors that have shaped younger investors’ behavior.


The first isn’t unique to my generation, but it certainly hasn’t gotten better. That’s the mistrust of financial advisors (and institutions altogether). We came up through the 2008 Financial Crisis – a financial meltdown that began and ended with Wall Street. We’ve seen criticism of SEC regulations and calls for tightening on the fiduciary standard. And while I don’t agree with widespread mistrust, it’s definitely there.

Financial Strain

Add that mistrust to a generation that finds itself with flat real wage growth, higher and higher education costs, and now ballooning housing prices, and you can see the recipe for a change in mindset. Millennials are pegged as unmotivated and irresponsible, which may be true for some. But what’s equally true is that average pay relative to buying power has stagnated over the past 40 years. Millennials are facing debts that are higher with pay that is relatively unchanged from generations. For many, jackpot-style investing is the only way they can see changing their circumstances.

Access to Tools and Information

Lastly, younger investors have everything they need to start trading… in their pocket. With a cell phone you can open a brokerage account, watch videos about trading, read news about hot stocks, discuss investing ideas on Reddit, and execute those ideas instantly.

Access to tools and information, paired with mistrust in the system and incentivized to hustle and make money outside of their 9-5 job has led to the creation of an independent and speculative investor.

The silver lining? This is exactly the type of investor that needs financial advice!

How Financial Advisors Can Bridge the Gap with Younger Investors

As a younger investor, albeit with an interest in fundamental investing, I believe there are a few ways advisors can connect to my peers and help them invest for long-term financial success:

Meet Them Where They Are

I’m going to sound like every other person who’s written on the topic, and advocate that financial advisors do two things—create a well-designed and well-functioning website, and either become adept at creating and posting content and distributing it through social media or hire someone that can help you do that. While there are numerous other factors to consider when speaking to younger investors, it doesn’t matter how prepared you are to serve them if they don’t know who you are. And even worse – if they know who you are and try to find more information about your services only to find a one-page website that looks like it was around for the Dot Com Bubble!

Your digital presence is not just a means for communicating with prospective investors, but it legitimizes your business in the minds of younger clients.

Bonus takeaway: when looking at how to connect to younger investors, seek to be interesting and helpful. Wallstreetbets has popularized options. Help investors understand what an option is and the risks involved. Younger investors are often in debt, and receive marketing for debt consolidation services and other resources. Help them navigate these choices. By being helpful, you’ll garner attention and earn trust, and in turn, win more clients.

Bring Compounding Interest to Life

“$6000 won’t change my life, but $100,000 would”. This is an actual statement I heard from a friend who was sitting on a 1000% gain in Dogecoin. It was his rationale for not selling and holding the crypto currency in hopes it would rise from $0.50 to $10.00.

But what I’d wager he wasn’t thinking about was the opportunity that $6000 presents when invested more rationally. Over 30 years at an 8% growth rate, that $6000 investment could grow more than tenfold. Life changing? Maybe not, but it would certainly support financial independence in the future.

Compounding interest seems basic, but I think it’s worth bringing to life. By helping investors understand how small investments can grow over time, particularly when supplemented with regular contributions, we can make rational investing look more attractive. 

Help Them Visualize Risk

Growth and risk come hand-in-hand. But I don’t think younger investors fully understand their risk tolerance. It’s easy to get swept up in Reddit threads where people post how much money they made on a YOLO investment. FOMO (fear of missing out) and constant access to trading tools can lead to retail investors assuming a lot of risk.

What’s the remedy? Fintech has come a long way over the years. I think we need to use it to help younger investors not only identify their risk tolerance, but visualize how misaligned their current portfolio is. Use your risk questionnaire as a lead generation tool. Give investors the opportunity to evaluate the risk of their current holdings. Learn their investment goals. Use Monte Carlo simulations to help them see the likelihood of reaching those goals. Do these things upfront, before the investor commits to your service. By helping younger investors identify shortcomings in their portfolio and educating them on how to address the issues, you position yourself as a trusted advisor that is ready to help them reach their goals.

Help Them Understand Bubbles, and Why They Burst

Bubbles burst when the fundamentals catch up to hype. In the Dot Com Bubble we saw highly leveraged firms begin to declare bankruptcy. Beyond wiping out the value of invested capital, these events create fear and panic, which lead to selling and rapid drawdown in stock prices. There are a lot of similarities in the crypto space today. We’re seeing aggressive investment in companies with little to no revenue and high debt, as well as currency that can’t be exchange for most goods and services—even Elon is pulling Tesla back from its Bitcoin-friendly stance.

Crypto likely has a future, just as telecom and internet companies had a future in the late 90s, but betting on any and every crypto entity, regardless of price, is a recipe for disaster.

They say those who don’t know history are doomed to repeat it. Maybe awareness of the nature and history of bubbles is just what younger investors need.

Millennials Need Your Financial Advice

The Millennial investor segment is one that is growing rapidly, both in assets and importance to long-term advisory business success. I’ve seen countless articles, videos, and presentations on how to work with this segment (of which I’m a part), each revolving around fee structures and communication practices. I think that’s important to consider, but to connect with any audience you must first understand their challenges, their goals, and the experiences that influence their mindset.

I hope this article has been insightful in that endeavor, giving you ideas on how to bring fundamentally-rooted financial advice to the investors that need it the most.



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