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Retail Revolution

Retail Revolution

| August 04, 2020
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Retail traders have flooded the market in mass since the pandemic. With avenues such as Robinhood that allows anyone to trade for free, traders have more of an incentive to throw money at the hot stock of the week. The current climate around investing and trading reminds me of the book "American Sucker." A journalist gets caught up in the excitement and FOMO of the dot com bubble and loses everything and has to start over. That man had a lot of capital and lost all of it. Back then you had a broker and had fees to make you think twice about your moves. Now all you have to do is take a little finance quiz that probably absolves Robinhood of any wrongdoing when you end losing your money and you can trade Tesla on margin!

The markets are not in your favor. It is an industry that is built on insiders and is moving towards computer algorithms that take advantage of newbies and low capital traders. The disadvantage is so steep and the low capital means that you will not be able to properly diversify. You are not investing at that point you are gambling. It is important to know the difference. It's basically the equivalent of purchasing a scratch-off. This also reminds me of the bitcoin bubble in 2017. A lot of people got burned on that and some point this market will come down. You aren't going to change your life by investing $5k in a couple of stocks. That money can certainly go towards something of better use and if you want to get started in investing focus on your 401k or start-up an IRA and contribute regularly instead of loading your money in the slot machine. 

With sports being canceled and many not being able to go to the casino could possibly explain why so many are entering the markets. Dave Portnoy has made a name for himself and has been hysterically been making fun of the finance industry and making money in the process. He is getting a lot of people interested which is a good thing and a bad. Good for the ones that get interested and research and bad for the ones who jump in headfirst. He has all the money in the world so I could care less if he is moving the market on a live stream. Just think twice if you are putting your money to its best use. 

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Stephen Poll
Financial Advisor at Clay Financial
Stephen@ClayFinancial.com
(419)806-2986
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