Dogecoin is ‘nothing more than a joke’: Ric Edelman
Ric Edelman, Edelman Financial Engine Executive Chairman, joins Yahoo Finance Live to discuss the rise in oil prices, outlook on cryptocurrencies.
Video Transcript
- It seems the economic recovery has another hurdle to clear, rising oil and gas prices. We've got crude oil now sitting at a six year high and gas prices also on the rise. We have the average for a gallon of regular across the country at $3.13-- or $3.14. That is about $1 higher than a year ago.
Joining us to talk about it is Ric Edelman of Edelman Financial Engine. Ric, good to see you again. So let's talk about these-- this rapid run up we're seeing in gas prices and oil prices. It comes at a delicate time for the US economy. We're already experiencing the fastest inflation in years. When do you think it starts to become a political headache for President Biden?
RIC EDELMAN: Oh, I think it already is. We just came out of the July 4 weekend where millions were on the road, first road trip since the pandemic. And they're experiencing those higher gas prices. We're going to see higher energy costs required this summer as the air conditioner is going to get cranked up with the heat, and then you're going to move into the winter with home heating oil prices, if this is sustained. So I think it's already bubbling up as a political issue and that's going to accelerate as months go on.
- Ric, and I know we want to talk to you a lot about digital assets and cryptocurrency, but I did want to quickly ask you, just because oil prices does impact inflation, and of course, we've been seeing today some of those inflation fears largely being shaken off, especially as we see these movements in the bond market. However, as we see these oil prices continuing to spike, how much do you think this is going to remain an actual financial or economic pain point for folks, many of whom are still struggling right now to come out of this pandemic?
RIC EDELMAN: Yeah. You know, it's a continuing tale of two cities. We have folks who are doing very well and those who are struggling. And those doing well are doing better and those struggling are doing worse. And what's fascinating to me is that when you look at how the investment community is reacting to higher oil prices, they're shrugging it off.
Their attitude is, no big deal. It seems that nothing can interfere with the bullish sentiment that Wall Street has. They're discounting all the risks that exist in the economy. They're taking an attitude that nothing's going to go wrong, that there will be no black swans and that everything will continue to be wonderful.
And hey, I hope they're right, but the fact that prices are priced so euphorically without any downside factored in, it makes you wonder that if something does go wrong, or at what point will people change their attitudes, and will sentiment altering cause a change in pricing? This is definitely worthy of concern.
- For sure. I want to spend some time, though, talking about these digital assets, because I know you have a-- sort of a philosophy when it comes to investing in cryptos, who should be exposing themselves to that very risky sector. What are your thoughts, Ric?
RIC EDELMAN: It's becoming mainstream very, very quickly. We're not quite there yet, but it's a whole lot more than it was even a year ago. We're seeing institutions get involved. Governments are paying much closer attention to this.
We're going to see more regulation and legislation, all of that very healthy. We're seeing main street-- mainstream Wall Street organizations getting involved. It ain't going away.
And so it's very, very exciting in that regard. I think in the next few years, it'll be a routine part of most people's portfolios. So for now, you've got to recognize it's still very speculative, it's still very risky. 1% portfolio allocation is plenty for most people.
You don't need to invest a lot for it to have a material impact on your portfolio. And a mere 1% allocation, if something goes wrong, it won't harm you either. So I think it makes a lot of sense for people to spend time learning about this, understanding it.
Forget about the get rich quick nonsense. Focus on this as a technology, an innovative one that's going to improve global commerce in an unprecedented way. And I think you can find a lot of opportunity for getting excited here.
- So Ric, we don't have any cryptocurrency ETFs as yet. So if you want exposure to this space, you essentially have to go out and buy each of these cryptocurrencies individually. And there's so many out there. I believe there's more than 5,000 cryptocurrencies. We had a chart just a moment ago of just a handful of them.
Which ones do you think investors really should be paying the most attention to? Of course, we have the Bitcoin and Ethereum, but there's a lot that's been made about Dogecoin, even recently. Which do you think, essentially, should get the most level of seriousness from investors?
RIC EDELMAN: Well the two, as you pointed out, are Bitcoin and Ethereum. I would completely ignore Dogecoin. That is nothing more than a joke. It's a scam and it's going to be something that ends very badly.
But here's the really good news. There is No ETFs out there, but there are other ways that you can invest in funds that allow you to delegate the job to a fund manager. These funds trade OTC. They are offered by Bitwise, Grayscale and Osprey, that allow you to invest either in specific coins such as Bitcoin, or Ethereum or Polkadot.
Or in a diversified fund, either in coins or in DeFi. So there are increasingly a wide variety of investment opportunities. In other words, the investment community is no longer waiting for the SEC to approve of an ETF. There are other ways you can engage. You don't have to wait for an ETF anymore.
- All right, there you have it. Ric Edelman of Edelman Financial Engine. Thanks so much for being with us.
