Senior Full Stack Developer
25th September 2025
Let me start off by saying: I’m not an economist. I’m just a regular guy with a 9-5 job creating software, with a mild interest in finance. I also realise this article probably comes across as a bit of a doompost - that wasn’t my intention. The state of the economy right now is very weird, and I just wanted to put my thoughts on a digital page. Not financial advice of course!
Here’s a hypothetical situation: you have some spare cash lying around, let’s say about £100,000. What do you do with it? You have a few main options to consider.
Starting with the most tempting, you could spend it. Get yourself a new car, upsize your home, go on a nice holiday, all the good stuff. Obviously these things are nice, but not the most sensible way to use your cash. If you spend £1,500 on a 7-day holiday in Iceland, you’ll likely have a great time and get some lovely memories, but you’ll clearly lose the entire £1,500. That’s a -100% ROI. Which is generally considered quite a bad investment. The same logic applies for other types of consumption. Even upsizing the home you live in still isn’t a great investment, since houses are expensive to maintain, don’t generate income, and appreciate in value more or less in line with inflation - only ~3.5% annually over the last 20 years.
So sure, you’ll probably want to spend a bit of your money on nice things (some recommend around 10-15%), but you should probably hold onto most of it. I might do another blog post at some point going into more detail on this balance. But let’s look at some other things you could do with that money.
Alternatively you could invest in stocks. This is generally the advice you’ll get from finance bros and finfluencers. Historically, stocks perform very well on average, and they’re extremely low effort (especially if you invest in an index tracker). The S&P 500 returns 10% per year on average. However, right now is an interesting time to be putting money into stocks, for a few reasons.
The biggest concern is the ‘AI bubble’. Companies have invested colossal amounts into AI in the past couple of years, are only planning on spending more, and stock prices have soared as a result. Now, regardless of how good AI is at writing your wedding speech, it still isn’t clear if or when the AI providers will be making a profit from it. An often-cited paper by MIT showed that even the companies adopting AI into their own workflows aren’t seeing enough of a boost to justify the costs. Yet despite the lack of profits, stock prices continue to increase. Quite frankly, it’s difficult to see this situation ending well for investors, at least in the short term.
But there are other problems in the stock market which don’t get discussed so much. One of these problems is private equity. Here’s a video that explains PE for you, but in a nutshell, private equity companies specialise in buying companies which aren’t doing so well, making changes to improve reported performance, and then selling the company on at a profit. That sounds harmless enough on the surface, but the details can be a complicated mix of leverage, speculation and financial engineering. It could even be described as a smaller-scale, more isolated version of what happened in the 2008 global financial crisis.
Another aspect people don’t talk about often is something I call ‘crypto-boosting’. This is an effect where a company’s share price increases simply because it invests in cryptocurrency. The clearest example of this is Strategy (formerly MicroStrategy) which fairly consistently operates at a net loss. Since they started buying and holding a reserve of Bitcoin in 2020, their share price has risen from about $12 to around $300. To be clear, on paper they’re still making a loss! ‘Crypto proxy’ companies like this present a feedback loop (and feedback loops in the economy usually have sharp teeth): the company buying crypto attracts investment, and the investment is used to buy more crypto. The loop continues, leading to crazy valuations on a loss-making company with no plan to change course. This video can explain the situation much better than I can.
But here’s the thing - the stock market’s been threatening to crash at any moment for literally over a year now, and yet it still keeps going up. So where’s all the money coming from? Well, the majority of these investments are coming from within companies themselves. The ‘Magnificent Seven’ are doing enormous share buybacks, which only pushes their own share prices higher, but given that they’ve just spent billions on a potentially loss-generating tech, how long can they keep this up? This is where my knowledge breaks down, and all I can do is throw my hands up and say “it just looks really bad but I don’t know why.”
So anyway, we were talking about what to do with our £100,000. Since stocks don’t look particularly safe, let’s look at other asset classes.
Crypto is ridiculously difficult to analyse, and as a result this section might come across as a bit unhinged. A Bitcoin generates no cash flow. It can’t really be traded for anything (except actual money). If you are lucky enough to find a shop that accepts BTC, prepare to pay annoying transaction fees. If you’re purely a law-abider, BTC is nothing but a speculative asset. So in that respect, pretty much all cryptocurrency has a value of close to £0.
But clearly that isn’t true - one Bitcoin is comfortably worth above $110,000 at the moment, so clearly people see value in it. Crypto is difficult to tax and regulate, and generally is great for illicit activity, which is actually a crazy useful property for a lot of people. Governments will recognise this, and will probably be reluctant and careful with crypto - so in the future you might expect crypto to become gradually more centralised and regulated (already happening), which would remove the only benefit crypto currently has.
To summarise, many of the problems we looked at in the stock market apply to crypto too since they are closely linked. The crypto world is constantly rife with scams and schemes and scandals, and crypto prices swing wildly for often no reason at all. I know many people swear by crypto, but you should probably be a bit nervous putting your £100,000 in here. Let’s keep looking.
Bonds have typically been considered the ‘safe’ choice for investors. Governments are so trustworthy that when you buy bonds from them, you just know they’ll pay out in full. Except even that’s starting to change. The international powerhouse, the USA, is now only a mere AA+ credit rating, downgraded from its previous AAA rating. And if you think AA+ still sounds pretty good, let’s put that in perspective: France has an AA- rating and is talking about needing an IMF bailout.
Take a look at the Wikipedia list of countries by credit rating and see how many have a ‘Positive’ outlook. Spoiler: there are 5 at the time of writing, while 10 are negative.
So bonds, which have a fairly low ROI anyway, aren’t looking as safe as they once did. Next!
Gold just keeps going up. The price of gold has doubled in the past 2 years, and every time you think it can’t possibly go up any more, it goes up even more. The fact is, everyone is expecting a stock market bust at some point. Gold is historically not just a diversifier, but also a hedge against inflation. Hence, people (and countries and companies) just keep on buying gold and other precious metals.
But there is a problem here too. See, when people buy gold, they usually don’t buy physical gold. They buy paper gold, like a gold ETF, or gold options/futures. And it’s no secret that the amount of gold claimed on paper is far higher than the amount of physical gold in existence. So when you buy gold via an ETF, what are you actually buying if all the real gold in the world is already owned by someone else? Again this is where my knowledge breaks down - I’m not totally sure what the implications of this are. Like what happens if people decide they want to trade their paper gold for real gold? Metals seem not only very expensive, but also very precarious.
We’re running out of places to put our £100,000 now. So let’s look at a classic - buying a rental property. Historically this has been a very lucrative investment. But now, in the UK at least, the government has been trying its very hardest to make things difficult for landlords. And regular people are struggling more and more to get onto the housing ladder.
There’s an absolute ton of expert analysis on this topic already (I’ll just give you a couple of links here: IMF, WEF), so I won’t bother with my own analysis. Although maybe I’ll do a separate blog post on that one day. But ultimately we’re in a position where people are buying their first home later in life, getting long-term mortgages that last beyond their retirement age, and then spending the rest of their lives struggling to pay for it. I don’t see this as sustainable. And in my opinion, the “just build more houses” approach is exactly what China did, and look where it got them. So I’m expecting some kind of major shake-up in the property market in the future.
Okay, I don’t know the answer to this. Just about everywhere you look in the financial world, something looks like it’s on the verge of collapse. You could diversify and put a bit of money into each of these places, but you’re still putting yourself in harm’s way. Alternatively, stuffing it into a pillowcase doesn’t sound like a terrible idea I guess. Buy a racehorse maybe?
By the way, the point of this article isn’t actually to spread fear. The fact that things haven’t collapsed indicates that there is actually enough duct tape to hold things together - at least for now. And clearly there’s a fair bit about the markets that goes over my head, so I’ve probably misunderstood some of this. But I just wanted to get my jumbled thoughts down really.