Is the market going to crash in 2021? Could Dogecoin hit $1? Is Robinhood a safe investment since it announced its IPO? Buckle up, young investors, because Philip Michael is here to answer all of your questions. If you want to brush up on your financial literacy skills, Ask Philip is the perfect place to start. Read below for excerpts from this Q&A. For the complete responses, check out the video.
Q. The Big Short investor who shorted the housing market in 2007 is saying that we’re on the verge of a mega-market crash. Do you think that’s true?
A. In short, The Big Short could very well be right. We don’t know; I just know there will be a price to pay. How big will it be? Could it be a mega crash? I guess so. But time will tell. I’m not giving you financial advice here — I must preface it by saying this — but no matter what you do, you cannot trust cash. Because the value of that cash that you have is eroding, and you need to put it to work so you’ll get a return that outpaces the rate of inflation. Otherwise, your money’s just going to wither away like a plant you don’t water. So, think about that.
Q. What are your thoughts on Dogecoin? Could it hit $1?
A. Could Dogecoin hit $1? Sure, of course it could. Will it hit $1? Think about this for a second: What’s the underlying value of this coin? Does it have some sort of use case suggesting it’s going to be a commonly accepted currency? Is there any indication of that? I don’t think so. So, what are we left with? Hype. Do you know what that reminds me of? Those pump and dump schemes. The penny stocks … It could hit $1 if enough people hype it up. But does that mean it has long-term prospects?
Q. What do you think about the Robinhood IPO?
A. Isn’t it funny how whenever there’s a situation where someone gets in hot water, gets canceled or there’s just some bad news, it gets really crazy. And then a few days pass by, and another story comes and takes everybody’s attention. Then you actually look down a few months, and you see they’re better off than they were before. Robinhood revealed that even though the people got mad at them and accused them, they grew in users and value. And now they’re going to be publicly traded at an insane valuation. So, that goes to show you that what you might hear on Twitter or in the news may not necessarily be a true reflection of what really happens in the marketplace.
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