Many others have caught on to the trend of investing in psychedelics, including a couple, Finn and Luna, who had met with Ramit Sethi to get investing insight.
Although spreading bets across a few high-growth assets may sound appealing, experts, including Sethi, warn that concentrating wealth in speculative, volatile investments is likely to end poorly.
The internet is filled with people encouraging others to buy investments they already own in a bid to drive prices higher. It also tends to spotlight the rare success stories of investors who struck it rich chasing hype-driven trends, while largely ignoring the far greater number who lost substantial sums doing the same.
What are psychedelic stocks?
Psychedelic stocks are publicly traded companies that research, develop, manufacture or commercialize psychedelic-based therapies, mainly for mental health and neurological conditions such as depression, PTSD, anxiety and addiction. These companies focus on substances like magic mushrooms, MDMA, LSD and ketamine for medical use.
Mycoskie invested through a fund called Mindset Pharma and through mental health initiatives through the Johns Hopkins Center for Psychedelic and Consciousness Research, the Multidisciplinary Association for Psychedelic Studies and U.C. Berkeley’s Center for the Science of Psychedelics.
Psychedelic stocks are popular because they have potential. If they hit their objectives, these companies invested in the field could one day be worth billions. But that’s a big if. Many of them have yet to generate revenue, are dependent on trial success and are vulnerable to regulatory changes.
In other words, just a few setbacks, economic or policy-wise, could be enough to turn them into fertilizer.
What healthy asset allocation looks like
One of the top rules of investing is diversification, which means spreading your money across assets that behave differently. Pairing psychedelic “mushroom” stocks or other medicinal hallucinogens doesn’t meet that standard.
True diversification allows investors to rest easier knowing that when one asset class struggles, another may hold steady or even perform well. This couple’s investments, on the other hand, tend to be sold off simultaneously when risk appetite fades.
