Jan 25, 2026
Many young investors are turning to social media and Reddit forums for investment ideas, often committing large portions of their available wealth to whatever opportunity appears to be generating the biggest returns. In many cases, understanding investment fundamentals and the risks involved takes a back seat to the appeal of getting rich quickly.
One couple recently told prominent personal finance expert Ramit Sethi that they invested a few thousand dollars from their wedding gifts in psychedelic “mushroom” stocks promoted on Reddit and that roughly two-thirds of their portfolio, or $160,000, is invested in Bitcoin (1).
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Spreading bets across a few high-growth assets may sound appealing. However, experts, including Sethi, warn that concentrating wealth in speculative, volatile investments is likely to end in significant losses (2).
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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.
Psychedelic stocks are popular primarily because they have the potential to make a lot of money. If they hit their objectives, some of these small companies could one day be worth billions of dollars. But it’s a big if. Many of these companies have yet to generate revenue, are dependent on trial success and vulnerable to regulatory changes. In other words, just a few setbacks could be enough to derail them.
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The risk of pairing speculative investments with cryptocurrency
One of the number one rules of investing is diversification, which essentially means spreading your money across assets that behave differently so that no single investment can seriously damage your financial future if it performs poorly. Pairing psychedelic “mushroom” stocks with cryptocurrencies, as the couple talking to Sethi did, doesn’t meet that standard.
While these are technically two different asset classes, psychedelic stocks and cryptocurrencies share many of the same risk characteristics. Both are highly volatile, dependent on binary outcomes and heavily influenced by investor sentiment (3, 4, 5).
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 (6).
What healthy asset allocation typically looks like
The right asset mix depends on each investor’s time horizon and risk tolerance. Financial advisors generally recommend portfolios weighted toward stocks, complemented by bonds and some cash (7, 8).
This structure is designed to support long-term growth while managing risk. Stocks, often held through low-cost exchange-traded funds, drive long-term growth, while bonds provide stability and income and cash offers liquidity for short-term needs.
Diversification matters because different investments perform well in different economic conditions, helping reduce volatility and limit losses. That includes within asset classes. For example, established companies like McDonald’s or Kraft Heinz have little in common with a biotech startup developing a new drug. Effective diversification should span sectors, geographies and market capitalizations.
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As investors approach their financial goals or become more risk-averse, portfolios typically shift toward less volatile investments. For example, a young investor with a long time horizon may hold around 90% in stocks and gradually reduce that exposure to 30% as they close in on retirement (9).
Why hype-driven investing can be a risky strategy
Everyone likes the idea of turning a small amount of money into a fortune, and the internet has made that goal seem easily achievable. The reality, however, is far less glamorous. There’s no investment guaranteed to make you rich; in fact, higher potential returns are typically accompanied by a greater risk of significant losses (10).
That dynamic was on full display in the couple who told Ramit Sethi they invested wedding money in psychedelic stocks and placed most of their remaining wealth in Bitcoin. Their choices weren’t driven by recklessness so much as optimism, fear of missing out and a lack of diversification — pressures many young investors face when navigating markets shaped by online hype.
For investors seeking a reliable path to long-term wealth, invest in assets you understand, diversify broadly and stick with a plan through market ups and downs. For investors unsure where to start, working with a qualified financial planner can help replace speculation with structure and turn investing from a gamble into a strategy.
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
I Will lTeach You To Be Rich (1, 2); Cambridge University Press (3); Forbes (4); Coinbase (5); Morningstar (6); NBER (7); Raymond James (8); Britannica (9); Federal Reserve Education (10)
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Financial journalist with 15+ years’ experience covering markets, economics and personal finance for a range of international publications including Investopedia, The Times, Investors Chronicle (Financial Times) and NerdWallet.
