Quick Take: Cryptos have not proven their case for the masses

Insights from Kunal Kapoor, the chief executive officer of Morningstar.
By Morningstar |  01-09-22 | 

Cryptos have not proven their case for the masses.

Most people have been sold a bill of goods that did not conform to reality. Crypto was sold as an inflation hedge. As digital gold. As a non-correlated asset class. None of that has been lived out.

I find the lack of stability and predictability to be a concern. The limited usage and backing says something to me, that the price of cryptos spikes when there is a war on and people are trying to get their money out of the country.

Retail meme-stock fans are not your average investor.

They tend to be younger, they may not even have opened a savings account, they go straight to investing.

For an industry that has long tried to broaden its appeal to those types of investors, I think it is a pretty fantastic opportunity finally to stay engaged with them. Pizza Hut doesn’t care where you bought your first pizza… It cares about your second.

Maybe the meme-stock crowd will eventually learn that there is no such thing as free stock trading.

It is not an active-versus-passive discussion, it is a low-cost versus high-cost discussion.

One thing that will definitely matter in the fight to win over investors, both experienced and new, will be costs. Low-cost active has also won and that is not talked about.

The above is an extract from a more detailed interaction that appeared in Financial News London.

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