Noor is whispering so her boyfriend won’t hear her. The 30-something designer from London is down about £14,000 as a result of her decision to get into investing, in addition to another £8,000 profit she made on bitcoin last year, but then lost. Nobody knows the full extent of Noor’s losses – hence the whispering. “I feel so stupid,” she says. “I can’t talk about it to my friends, I can’t talk about it to my boyfriend.” Noor is not her real name.
It started in November 2020, around the time of the US presidential election. “People expected Trump to win again,” she says, “and it was a weird time, because it was mid-pandemic, and it just seemed like this financial moment might be happening.”
She started reading about cryptocurrencies online, and the more she read, the more ads for trading platforms she was served on her social media feeds. Because of Covid, Noor hadn’t spent much money over the year. So she bought £10,000 worth of the cryptocurrency bitcoin online, which turned into £18,700 within weeks. “I’d never invested before,” she tells me.
She’d sleep with her phone under her pillow and wake up during the night to check the performance of her bitcoin. (Unlike listed stocks, bitcoin can be traded 24 hours a day.) “It was cooking my brain,” she says. “I’d look at it constantly.” All she talked about to her boyfriend was how well her investment was doing. “I’d be telling him, ‘Look, I just made £400 in a day,’” she says. Noor started to fantasise about a future in which she’d never need a mortgage, where she’d invest her way to extreme wealth.
Flushed with success, she pulled her money out of bitcoin, downloaded the brokerage app Trading 212, and started investing in other cryptocurrencies and stocks: Ripple, a cryptocurrency and platform; companies that invest in the legal cannabis industry; psilocybin research brands; Beyond Meat, makers of plant-based meat substitutes; BioNTech, a German biotechnology company; businesses developing gene-editing technology and psychedelic medicine; and gold and silver.
Noor would wake up and watch the YouTube channel FX Evolution, where a headphone-wearing Australian trader talks through the stock market’s activity for hours on end, while amateur investors excitedly trade tips in the comments. She joined an investing group on the ultra-private messenger app Discord. “It was a social thing,” Noor says. “Being in that group was the highlight of my day.” She frequented the Reddit forum WallStreetBets, which shared tips (and in January infamously drove up the stock price of GameStop, an ailing bricks-and-mortar video game chain), and spent more time on Twitter, which has a huge investing community. By now, her entire news feed was about cryptocurrencies and stocks.
She learned the language of the online “meme stock” movement, the community of amateur investors that coalesces on social media platforms to discuss their options while swapping memes: “to the moon”, followed by a rocket emoji, means a stock will go up; “diamond hands” means continuing to hold a stock despite market volatility; while “tendies” is the profit made from an investment. “I started talking like an ape,” she says. (“Ape” is internet slang for a bullish retail investor.) She couldn’t read a book, because she’d have to check her portfolio every half-hour. “My right hand was constantly cold from touching my phone,” she says. “My boyfriend called it my Wall Street hand.”
Pretty quickly, everything began to fall apart. First Ripple crashed, then in February Noor got into the GameStop mania too late, and lost even more money. “It was the worst time,” she says. “I couldn’t eat, I was just constantly looking at my phone.” She spent even more time online looking for stock recommendations as a way of clawing back some of the money she’d lost, or else buying what other people were investing in on the popular trading apps. By now, she’d stopped bragging about her investments to her boyfriend – she was too embarrassed.
Part of the problem was that Noor is not a natural investor. “I have no patience, and that’s a disaster,” she says. The bigger issue was that she had no idea what she was doing. Although she could use financial jargon fluently, she didn’t really understand what it meant: she watched the film The Big Short, but couldn’t explain what shorting was. She bought stock depending on internet hype, or how she was feeling on the day.
At the time we speak, Noor has lost her £10,000 initial investment, the £8,000 she made on bitcoin, and another £5,000 on top of that. Does she view this as speculation, or investing? After a pause, she finally says: “I see it as gambling.” And yet Noor still thinks she can claw her way out. “Now I think I can invest,” she says, “but I don’t know. It’s cost me a lot of money. I mean, if I can get some back, maybe I can find a good place to get out.”
She sounds desperate, at once self-aware and blindingly deluded. She sounds, in other words, like a roulette player on a losing streak.
This is the year ordinary people discovered financial markets. Through a heady combination of lockdown-induced ennui, generous economic stimulus packages (on social media, memes make reference to investing your “stimmy cheque”) and the GameStop run, there’s never been so much amateur money sloshing around stock markets, nor such interest in arcane and impenetrable financial jargon. If it feels as if everyone is talking about their stock options and crypto wallets, it’s because they are. And at the vanguard of this new, online-centred investment community are young people, women and minority groups.
A recent Financial Conduct Authority-commissioned report found that women, the under-40s, and people from a black, Asian and minority ethnic background are driving this DIY movement, investing in high-risk products such as cryptocurrencies, foreign exchange (forex) trading, and contracts for difference (CFD), a type of investing where individuals bet on whether a security will go up or down between the opening and closing trades of the day. (Contracts for difference are banned under US securities law. Noor blundered into CFD trading, as she blundered into everything else.)
These new investors, the report found, used social media for tips, were overconfident, invested for short-term thrills rather than long-term gain, and often did not understand the hazards. The regulator was so concerned by the entrance of these retail investors to the cryptocurrency market in particular that it issued a warning in January this year, telling people that if they invested in cryptocurrencies, “they should be prepared to lose all their money”.
“It’s always encouraging to see younger investors enter the market and gain valuable experience,” says Susannah Streeter of the retail investment platform Hargreaves Lansdown. “But there is a concern that the collision between social media influencers, and the ease of use with which many people can use trading apps, is causing newbie investors to take short-term speculative decisions, rather than linking their investments to a long-term plan.” She tells me that Hargreaves Lansdown has noticed growth of 57% in the use of their investing app in the last six months of 2020 compared with the same period in 2019.
According to market research firm Mintel, 11% of generation Z and 13% of millennials say that investing in stocks and shares will be a priority after the Covid-19 pandemic ends, compared with just 4% of generation X and 3% of baby boomers. “Cryptocurrencies and online investment platforms have become pop culture touchstones, as well as financial products and services,” says Mintel’s Rich Shepherd, “This, and the digital-first nature of these products, means they are particularly appealing to tech-savvy young consumers.” The rise of easy-to-use apps such as Trading 212 or eToro has removed the barriers to entry. But much of this investing is ill-informed. “I hear people talking about their crypto wallets,” Streeter tells me. “I question them and say: ‘What does that coin do? What blockchain is it built on? What is its use case?’ They say: ‘We don’t know. It’s just done really well.’”
When I speak to Shane Blake, 26, a digital marketing worker from Brighton, he’s in a low mood. “I’m feeling a bit flat after what Elon did,” he says, with a deep sigh. “He knows how to take money straight out of my pocket. It’s not nice waking up and checking your balance and realising you’ve just lost £3,000.” He is referring to a social media post from the tech CEO in which he stated that Tesla would no longer take bitcoin for payments due to high level of fossil fuels involved with the cryptocurrency’s transactions (the amount of electricity used has the same carbon footprint as Argentina). With that message, Elon Musk wiped £7,000 off the price of bitcoin.
Blake started investing in bitcoin and the cryptocurrency ethereum in January. “A friend showed me how much money he’d made on bitcoin,” he says. “When you see that, you go for it. I put my life savings in.” Like all the young people I speak to, Blake is anxious to impress me with his fluidity in cryptocurrency jargon. He insists that he knows what he is doing, and picks his investments carefully. “I am a holder of ethereum because I believe in the project and the fundamentals,” he says. Blake asks me not to disclose the value of his holdings, because “crypto can make you a target” for hackers; he will only tell me that he has more than £5,000 in investments. “I hold a good number of coins,” he says, modestly.
And so far, it’s going well. “I’m guaranteed to make about £1,500 a week indefinitely,” Blake says with confidence. “It’s just overwhelming, because I’ve never had that much money in my life.” The week after we speak, the global cryptocurrency market crashes, driven in part by a crackdown on bitcoin from Chinese regulators.
Where do these young people go when they want advice on their investments? Social media, of course. TikTok is full of fast-talking finance gurus squinting at trading charts while rattling off jargon; amateur investors coalesce around YouTube communities or pay to enter private Discord groups, where “signals” on which stocks they should invest in are traded.
Virtually none of these communities or content creators adheres to FCA guidance around the giving of financial advice. “There are a lot of fools on a lot of apps talking nonsense,” says Poku Banks. Aged 20, the University of Nottingham student has 327,000 followers on TikTok, where he shares videos about entrepreneurship, affiliate marketing and investing. Banks is always careful to emphasise in his videos that he is not a qualified financial adviser, and urges people to do their research before investing. “My main ambition is to get personal finance taught in schools,” he says. “That’s why I started making content online.”
Banks sees his generation’s mania for financial investing as partly Covid-induced. “When the lockdown hit, it taught people that their jobs aren’t safe, that you need to develop a source of income. So lockdown accelerated people starting side-hustles, because they were bored. Plus, crypto has been booming. People are seeing crazy returns.”
He is scathing about the bad actors that proliferate in this space. “There are people pushing courses that are just regurgitated information from the internet, or showing off a flashy lifestyle just to get the views.” On social media, forex traders pose in front of luxury cars holding thick wads of cash, or with arms full of designer shopping bags, advertising courses that promise to teach their followers the skills to become fabulously rich, like them. (Often, these influencers are reality TV regulars: Celebrity Big Brother winner Stephen Bear, and Geordie Shore regular Chloe Ferry, have both promoted forex trading courses.)
Part of the problem is that it’s enormously difficult for the average amateur retail investor to discern which creators are well-intentioned and knowledgable, and which are scammers. “Pump and dump” schemes, where investing gurus purchase worthless stock in advance and then encourage their unwitting followers to invest in it to drive the price up, are commonplace. Meanwhile, many of the self-styled gurus make their money by selling courses, rather than investing in the market.
“I’m not concerned about anybody, because I think it’s their own choice, and if you want to be an idiot with your money – I mean, I believe that anyone with the brains to put money into the stock market knows the risk, and if you don’t, that’s your fault,” says the Stock Lizard King, an online investment guru with 125,000 Twitter followers and a private, paid-for Discord group with 22,000 members. (The 25-year-old trader from Boston, Massachusetts, declines to give me his real name.) Through his community, he encourages people to “play the game as best as you can so you’re not financially trapped for your entire life”. However, he does not have any qualifications to give financial advice, having studied marketing at college. “There is risk, and they have to be aware of it,” he says of his community. “You can’t just go dumping your life savings into the stock market and hope you’re going to be filthy rich at the end of it. It takes a lot of skills.”
Although it may seem counterintuitive, what is driving so many young people to embrace the volatility of the cryptocurrency and stock markets is the same force that makes their lives feel uncontrollable and chaotic. When your future feels inherently uncertain and unpredictable, with global financial systems rigged against you, and stability, homeownership and the promise of upwards social mobility a gift only earlier generations had within their reach, why not embrace risk?
“It’s so hard to prepare for the future now,” Blake says. “It’s never been more difficult. The competition is out there. Everyone has a degree, so degrees are meaningless. It’s so difficult to buy a house.” The Lizard King views higher education in general as a scam. “I feel screwed by the college system,” he says. “I graduated, but this whole system is set up to keep you trapped, with student debt and credit card debt.”
There is another factor underpinning this speculative interest in cryptocurrency markets. We live in a society where monetary recompense has become increasingly disconnected from our labour. Freelancers in the gig economy work 16-hour days without benefits, while the 1% accrue ever vaster riches. According to the Resolution Foundation, it would take more than 400 years for the median household in the UK to save enough disposable income to reach the average wealth of the richest 1% of the population.
People from black, Asian and minority backgrounds (the people most likely to invest in risky financial products) on average earn less than their white peers, are less likely to own their homes, and are more likely to get into debt. It’s not hard to see why people from these communities might be more attracted to investing, when the odds of getting a well-paid job and purchasing a property are so stacked against them.
Meanwhile, social media has swung the doors open on the lifestyles of the super rich. The new wave of uber-high-profile social media influencers, such as TikTok’s Charli D’Amelio and YouTube’s Jake Paul, have spoken about buying cryptocurrency. “Influencer culture pushed people,” Blake says. “People show off their lives and wealth on socials, and that spurs everyone on.”
Although he is critical of some aspects of this get-rich movement, Banks in general approves of it. “I do push hustle culture,” he says. “I’m not going to lie: I want to be rich.”
Just as social media creates a new, aspirational mindset, pushing young people to accrue wealth, it also fuels risky investment decisions, as these amateur investors see tweets about a stock “going to the moon”, and jump aboard. “It’s about Fomo [fear of missing out],” Streeter says. “Some people like the emotion of that rollercoaster ride. And if it’s money that people can afford to lose, it’s up to them. But the danger is when people are doing it with money they can’t afford.”
Fomo is built into the very structure of the investing apps, which provide forums where users can swap stock tips. On eToro, stocks flash green and red like the lights of a Christmas tree, depending on how they are performing, as they would in a physical stock exchange. “The user experience of the apps makes you think, OK, everyone is buying this, so I should buy this,” Noor says. This fuels riskier, emotion-driven investment decisions. According to Streeter, “the more established investment platforms, like ours, don’t provide chat communities, which can fuel short-term trading behaviour”.
The gamification of the major investing apps and platforms also drives gambling-like behaviour. “What we’ve seen in the last few years is the blurring of the lines between gaming, gambling, and investing,” says Matt Zarb-Cousin of the Campaign for Fairer Gambling. “Conventional gambling is more accessible than ever through smartphones. And there’s a blurred line between that and the gamified version of investing through these new platforms that have made it extremely easy to get involved in things like day trading.”
Robinhood, one of the most popular trading apps, is currently facing a lawsuit in Massachusetts. The securities regulator alleges that the platform encourages inexperienced traders to make risky purchases by gamifying the experience, sending customers emoji-filled messages that influence them to buy shares, as well as highlighting trending products in a way that encourages a Fomo mindset.
Blake has seen his friends get sucked into day trading, a high-risk form of investing where people try to make money by buying and selling a financial instrument as its price varies multiple times during a day, hoping to make a minuscule profit on each trade. “I don’t day trade,” he says. “It’s really addictive: it makes people form effective gambling habits. I’ve seen friends who feel unable to do things because they can’t get away from their charts.”
Tony Marini is a therapist at Castle Craig addiction rehabilitation centre in Peeblesshire, Scotland. Three years ago, the clinic began accepting people with cryptocurrency addictions: since then, Marini has treated about 30 clients, mostly young men, for addiction to cryptocurrency trading in particular.
“It starts out as a sociable thing,” Marini says. “People brag about making money with their friends. But you never hear when people start losing money, because of the guilt and the shame.” Marini recently treated a man who lost £1.5m on cryptocurrencies that he embezzled from his company. Another former patient lost nearly £2m. “I know crypto guys whose partners try to take their phones away from them, and they start shaking,” he says. “It’s withdrawal. They cannot not have their phones in front of them.”
The volatility of cryptocurrencies fuels addictive behaviour in a way that regular stock market trading does not. “Because it goes up and down so much, it releases endorphins, and acts as an emotional trigger,” Marini says.
When investors’ cryptocurrencies are doing well, they get into what Marini terms a “winning stage”. “The fantasies start: I’ll pay off my mortgage, buy a bigger house, be able to help my family and friends.” Often, they invest more money, getting into debt. “Then they start losing money,” he says. “The isolation starts. They start lying. They can’t stop gambling, so they borrow more, or do something illegal. They stop paying household bills. They get feelings of guilt, shame, or resentment. They start blaming other people, or panicking.” He is describing, almost to a T, Noor’s predicament.
I think about Noor often in the weeks after we speak. To my relief, when I check back in six weeks after our first chat, she’s in a better place. “I won most of it back,” Noor says. She is still £6,500 in debt, but has managed to stem further losses.
But she’s whispering again – her boyfriend still doesn’t know. “We’re meant to be saving for a house,” Noor explains. She managed to find her way out of her hole by investing in gold, silver and pharmaceuticals, and cutting out of the cryptocurrency market entirely.
She is sanguine about the white-knuckle experience. “I’m not angry,” she says. “It’s my fault.” But Noor does blame the investing apps for sucking her in. “I’m not going to use these digital products any more. The interest rates are super-hidden, and if you keep the notifications on, you are basically their slave.” She quit the YouTube community, too, after becoming dispirited with the expertise of the trader she was following. “He always said: ‘I know what I’m talking about,’ but then he told me to buy more gold, which crashed.”
Noor’s plan is to hold her existing portfolio for a long time, invest in companies she believes in, and stop checking her investments constantly. In other words, she has become an investor, not a speculator. “I don’t think I’ve cracked it,” she says. “I don’t think anyone can crack it. But the worst thing I ever did was listen to other people who claimed they cracked it.”
For every Noor, quitting the goldrush in favour of slower and steadier gains, there are countless young people hoping to cut out of the rat race, dreary job and millstone student debt by getting rich on the stock market. The roulette wheel spins, the notifications ping, the clock ticks past amateur hour, and the retail investors rush in.