_This article is from: _WSJ; Original author: Konrad Putzier

Translation｜Odaily Planet Daily (@OdailyChina); Translator｜Azuma (@azumaeth)_

On that Wednesday night when executing a mission, U.S. Space Force Captain Gordon McCulloh sat in a military propeller plane, suspended in the calm and dim night sky of New Mexico, when the group chat of his squadron suddenly exploded with activity.

Squadron members—some on the ground, some in the air—were collecting data related to electronic warfare while also keeping an eye on their investments. Google’s stock price had just soared in after-hours trading.

After landing, McCulloh saw the news: a ground officer had sent a screenshot of the news; another replied, “To the moon.” This day was becoming exceptionally profitable for McCulloh and his brothers.

The U.S. military may be the world’s most lethal “investment club,” and they are raking in profits during the current bull market.

Active-duty military personnel are making significant wealth from tech stocks and Bitcoin, discussing obscure cryptocurrency investment advice on aircraft carrier decks. As the market continues to hit new highs, more and more new Porsche and Hummer models are appearing in base parking lots. Meanwhile, social media influencers in uniform tell their followers that they too can become wealthy.

As a flight test engineer, McCulloh has heavily invested in companies related to nuclear energy. He bets that the boom in AI data centers will further drive up electricity demand. So far, everything has been smooth sailing. Some of his stocks have doubled or more since spring, although this 27-year-old officer is also pondering how long this rally can last.

“I have to admit, I don’t understand why the market can keep rising without any obstacles,” he said. Although there have been some fluctuations recently, overall stock prices have skyrocketed since April, boosting the net worth of soldiers.

Luke Air Force Base, located in Phoenix, is one of the areas with the highest rates of cryptocurrency reporting on tax returns in the U.S. in 2021.

Military personnel drove the surge in cryptocurrency prices that began in the fall of 2020 and peaked in 2021. According to an analysis of IRS data by The Wall Street Journal, in 2020, eight of the top 25 ZIP codes in the U.S. for reporting cryptocurrency income or disposals were located near military bases. Bitcoin’s price quadrupled that year. By 2021, this number rose to 11 out of 25.

IRS data shows that near Holloman Air Force Base in New Mexico, 16.3% of individual income tax returns in 2021 reported receiving, selling, exchanging, or disposing of cryptocurrency; this rate was even higher near Luke Air Force Base in Arizona (19.4%) and Vandenberg Space Force Base in California (18.1%). In contrast, only 4.1% of tax returns nationwide checked the same item.

Military bases lost this dominance in 2022—this is the latest annual data provided by the IRS. That year, cryptocurrency prices plummeted, and the number of people reporting cryptocurrency transactions both on and off base dropped sharply. But the cryptocurrency frenzy of that year—and the concurrent meme stock craze—addicted an entire generation of military personnel to investing.

While many military personnel are long-term investors focused on index funds, some engage in short-term speculation or bet large amounts of assets on a few stocks or cryptocurrencies. They tend to be young, having only experienced market upswings, and have few means to hedge risks.

“If the market experiences a significant pullback, they will definitely suffer,” said financial advisor and Air Force veteran Brian O’Neill.

Some have already experienced such pain, suffering considerable losses from a bad bet, but military personnel tend to talk more about their victories than their failures. O’Neill said, “There’s a culture of bragging here.”

Saunders recently bought a Hummer with his extra income, both as a reward for himself and to support his side hustle as a KOL.

This Coast Guard member records investment and financial advice videos in his home studio and surrounding locations in St. Petersburg, Florida.

Saunders made profits from Tesla stocks, but he said he lost over $10,000 in a single day last winter while trading a leveraged product on a stock of MicroStrategy (the company that buys Bitcoin, now known as Strategy). He has mostly turned to stock market index funds now. He also earns a five-figure monthly income from being an influencer on TikTok and Instagram.

His specialty is: creating videos that provide financial advice to military personnel.

Hot Zones of Activity

Military bases are fertile ground for the investment frenzy. They are filled with young people—many of whom are naturally inclined to take risks—who have ample time and disposable income, and there are almost no taboos when discussing personal finance, as military salaries are transparent and determined by rank. While the military provides guaranteed pensions after 20 years and unparalleled job stability, they do not offer generous salaries or six-figure year-end bonuses.

The military community has long been active in the investment field. Some utilize zero-down loans from the Department of Veterans Affairs to purchase rental properties. In the early 1980s, during a period of high inflation, soldiers confined in nuclear missile submarines for months passed the time discussing gold bars and raw diamonds. In the late 1990s, tech stocks became the object of nationwide pursuit.

But over the past two decades, two intertwined waves have greatly fueled the culture of wealth in the military: the rise of trading platforms with lowered barriers to entry, and later apps like Robinhood; and the ongoing war on terror.

Since the early 21st century, hundreds of thousands of troops have been deployed to remote bases in Iraq and Afghanistan. They received hazardous duty pay, family separation allowances, and were exempt from federal income tax. Suddenly, they had thousands of dollars in extra income and began seeking investment opportunities.

F-16 fighter pilot Shawn Walsh opened his first brokerage account in 2008 while stationed in Iraq. His primary mission was to bomb insurgents, but between sorties, he often wore full flight gear and waited for hours in a small shed just a short sprint away from the aircraft. There, with nothing to do, he and other pilots would discuss various investment strategies.

Several military bases, including Vandenberg Space Force Base on the central coast of California, fueled the cryptocurrency frenzy between 2020 and 2021.

In 2013, Air Force transport pilot Spencer Reese shuttled soldiers between Kyrgyzstan and Afghanistan. “Every mission was a crash course on different investment strategies,” he said.

Someone told him about investing in gas stations and 7-Eleven convenience stores; another recommended covered call options; and someone else liked Bitcoin. During longer flights, Reese would read some investment books.

The military does have basic training courses on saving, budgeting, and investing, but word of mouth is often a more popular source of advice. While service members are very competitive, they also have a strong camaraderie—even in the investment realm. If someone makes money, they will tell others because they want their comrades to make money too. Officers often pull out their phones to show others their investment account balances.

Cryptocurrency spread like wildfire among the military in the early 2020s. Navy Commander Zach Rodriguez invested over $100,000—half of his family’s savings—into tokens like Chainlink, Polkadot, and Quant. A friend sparked his interest in cryptocurrency while he was cruising the Pacific on an aircraft carrier.

In 2020, Major Zach Rodriguez is pictured next to a helicopter, marking the beginning of his cryptocurrency learning journey during his Pacific deployment.

As the value of coins soared, he initially saw substantial returns, but then faced a crash. He reported that he was also scammed out of $250,000 worth of cryptocurrency. Now, this helicopter pilot has become a “Bitcoin HODLer”—focusing on investing in Bitcoin and Bitcoin-related companies, stating that his holdings have risen to about $1 million.

The frenzy for meme stocks similarly swept through the military with comparable force. Air Force health services administrator Staff Sergeant Durelle Bailey was pursuing a master’s degree in a classroom at George Mason University in 2021, alongside more than twenty active-duty military personnel, when one of them mentioned a stock of an education technology company called Chegg. The stock price had dropped, and according to that person, it was a great buying opportunity.

“He said, hurry, buy now, or it will go back up,” Bailey recalled. Instantly, eight or nine people pulled out their phones to buy the stock.

Staff Sergeant Durelle Bailey, photographed in Arizona in 2019. Over the past decade, his savings have grown from zero to a six-figure net worth.

Bailey initially invested a few hundred dollars but ultimately lost money. Chegg's stock price exceeded $113 per share at the beginning of 2021, then fell below $25 by the end of the year, with the most recent price closer to $1.

Wherever Bailey goes, stocks and cryptocurrencies are the topics of conversation. “We talk about it in the barracks, in the gym, and in the cafeteria,” he said.

When Bailey joined the Air Force in 2015, he had no savings. Now, he and his wife have a net worth firmly in the six figures, largely thanks to stock index funds. The 31-year-old said, “Our future is secure now.”

New Wealth and New Concerns

Signs of rising wealth are evident near military bases.

Army warrant officer and helicopter pilot Eric Rawlings, currently stationed in the Middle East, said he recently bought a $10,000 Rolex to celebrate a milestone: he earned more from stock investments than his military salary for the first time.

He is not alone. “The cars driving around the base are quite extravagant,” the 29-year-old said.

Warrant Officer Eric Rawlings wearing the Rolex he bought to celebrate his investment success.

Some financial advisors and veterans worry that the good times may not last. Price-to-earnings ratios are near historical highs, and stock indices are increasingly dominated by a few tech giants.

“I’m concerned that we might be heading for a bubble burst,” said retired Army officer David Ashcraft.

During the tech boom of the late 1990s, a young lieutenant Ashcraft bought stocks in Cisco and Sun Microsystems. After the market crash, the value of his IRA account fell from $10,000 to about $3,000. Since then, he has only invested in index funds.

He said, “If someone tells me they’ve put all their money into cryptocurrencies or a few stocks, I would still be worried.”

Bonds have largely fallen out of favor among military personnel, as their performance has lagged behind stocks in recent years. Few hold large amounts of cash.

Many military personnel believe they can take on greater risks because they have job security and will receive guaranteed pensions after 20 years of service. Even conservative investors are exposed to higher risks due to market structures. Space Force officer McCulloh, stationed in New Mexico, said that several tech and energy stocks now make up a large portion of his net worth simply because they have appreciated so much.

But high-risk bets can still backfire in a strong market. In 2023, Moises Gonzalez, a Marine truck driver stationed in Albany, Georgia, with an annual salary of $38,000, lost $20,000 while day trading gold and stocks.

Moises Gonzalez experienced the highs and lows of day trading on his equipment in the base dormitory.

“Some days I really can’t take it because I just keep losing, losing, losing, losing,” he said.

His largest single-day loss was $15,000, while his biggest gain was $6,000.

He set up three monitors in his base room—a scene that once made a colonel frown during a routine inspection—and he also took his laptop to the vehicle dispatch area at work to trade during his free time in the mornings.

Over time, Gonzalez improved his skills. In 2024, he made $30,000 from day trading. A few months ago, he left the Marine Corps and moved to Hawaii to trade full-time. This 25-year-old hopes to earn $10,000 a month in the market, but he has not yet reached that goal.

He said, “I can make $7,000 in three or four days, and then lose it all on the fifth day.”

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