Over the long term, the stock market is a proven money machine. Since 1980, the benchmark S&P 500 has delivered an annual average total return, including dividends, of just over 11%. This is to say that people who chose to reinvest their dividends have doubled their money, on average, every 6.5 years since 1980. That’s impressive considering the many obstacles the stock market has navigated its way through (the dot-com bubble, the Great Recession, and the coronavirus crash).
But in recent years, the broader market has taken a back seat to the mother of all momentum trades: cryptocurrencies. For example, Bitcoin, the world’s largest digital currency by market cap, has averaged a triple-digit annual return, which absolutely crushes the performance of the S&P 500.
Yet, it’s not Bitcoin that has retail investors captivated. The true crypto charmer is the “people’s currency,” Dogecoin (CRYPTO:DOGE).
The Dogecoin bulls aren’t seeing the full picture
Why Dogecoin? Some investors love it because of its perceived-to-be “affordable” price of less than $0.40 per coin. Others point to its lower transactions fees relative to the Big Two (Bitcoin and Ethereum). And still other investors believe in Dogecoin’s growing utility. Unfortunately, all of these would-be catalysts are incorrect or they overlook the big picture.
For instance, Dogecoin might be nominally cheap at $0.38 per coin (as of late afternoon June 4), but this completely ignores that there are almost 129.9 billion Dogecoin already in circulation, with approximately 5.2 billion new Dogecoin being added by mining activity every year. The roughly 4% supply inflation in 2021 might not sound like much, but it’s been well over a decade since actual price inflation in the U.S. was 4%. In short, Dogecoin is neither cheap, nor is it a very good hedge against inflation.
If you were to take a closer look at Dogecoin’s transaction fees, you would see they’re lower than Bitcoin and Ethereum. But what enthusiasts frequently sweep under the rug is that they’re noticeably higher than a number of other popular cryptos. Stellar, Ripple, Bitcoin Cash, Bitcoin SV, Ethereum Classic, Nano, and Dash are just a few that have markedly lower transaction fees than Dogecoin. Further, the roughly 20 minutes Dogecoin takes to validate and settle payments is higher than a lot of its peers. It’s not the efficient network it’s being made out to be by its fans.
Lastly, its utility is questionable. That’s because there isn’t much utility at all off of cryptocurrency exchanges. Only roughly 1,300 businesses worldwide have given the green light to accepting Dogecoin as a form of payment, and it’s taken eight years just to reach this paltry level.
To sum things up, Dogecoin is a dud, and it’s not worth your hard-earned money.
Dump Dogecoin for these top-tier stocks
Instead of buying what looks to be a hype-driven pump-and-dump asset, my suggestion would be to put your money to work in the following trio of surefire stocks. These are companies with real growth prospects and fundamental data you can wrap your hands around.
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