I really, really dislike Dogecoin (CCC:DOGE-USD). It’s hard for me to pin down exactly what it is that irks me so much about it in particular. I can point to the fact that it started as a joke, remains a joke, and yet has come to be taken seriously. I can point to the idea that it has no particular use.
And I can point to the idea that its current market capitalization of $44 billion is nonsense. Or much worse, there’s the notion that it could run to $1 and somehow be on the cusp of breaking into the top 100 corporations by value.
Whatever Dogecoin is, I think it makes very little or no sense at all. But it was a recent interview with a YouTube personality, “The Dogecoin Millionaire,” that really solidified my opinion. Now I’m sure: there’s no logic behind investing in Dogecoin.
Decentralized Finance Is Fine
I don’t dislike decentralized finance, or defi, by any stretch of the imagination. If you read my articles here with any regularity, you’ll know that I really think that there are projects in the space with real staying power. I particularly like Cardano (CCC:ADA-USD) because it is well-defined, well-run, and is proving that it can actually be used in conjunction with the blockchain.
Defi is not the issue. Dogecoin and the brain-dead, YOLO, to-the-moon idiocy that typify it are the problem.
The “Dogecoin Millionaire”
The “Dogecoin Millionaire,” whose real name is Glauber Contessoto, is a guy who made a big bet on Dogecoin. In fact, he put everything he had into it, and 69 days later, on April 15, his net worth had jumped to $1 million.
I hold no ill will toward him for that. It was a bold move that few would have been brave enough to have made. And it paid off. Kudos to him.
But the thing that strikes me most about “The Dogecoin Millionaire” is how much he can disassociate a Dogecoin investment from reality. In the interview to which I linked previously, he starts out by explaining his experience with the stock market.
He began buying stocks in 2019 and mentions that he first purchased Tesla (NASDAQ:TSLA), Nikola (NASDAQ:NKLA), Uber (NYSE:UBER), and Carnival Cruise Lines (NYSE:CCL). He then goes on to say that the GameStop (NYSE:GME) fiasco was the catalyst that impressed two things upon him. First, he says that the market isn’t as much based on “free trade as we like to believe.” More importantly, he says that he realized that if GameStop can rise so quickly, then another asset could also do so.
The interviewer asks him what his investment theory is, and Contessoto responds that he looks for undervalued stocks. He defines undervalued assets as those that he believes will be better positioned in two to five years. The investor says nothing about valuation, metrics, revenues, profitability ; he just bases his moves on feelings.
He’s right to look for companies that can do well over the long-term, but that’s about his only constructive idea. And it’s fairly easy to poke holes in the idea that Tesla, Nikola, and Uber were undervalued when he bought their shares.
So Why Dogecoin?
The interviewer calls “The Dogecoin Millionaire” an avatar for the times. I think that’s a pretty accurate description. Contessoto, when pressed about why he chose to throw it all down on Dogecoin, gives a very interesting response:
“..you gotta understand, I had no prior knowledge of cryptocurrency before Doge. Doge was basically my entryway and the bridge into that world for me and it’s interesting because now I look at it as the same for other people. I look at Doge as the bridge from the regular world that we all live in …cash money, people working jobs..it’s not threatening, it’s fun, it’s happy, it’s jokes, it’s memes..”
Yikes! It’s actually a pretty funny interview although it wasn’t intended to be. Either way, stay away from Dogecoin.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.