“Don’t be bearish.” That was the message delivered by a Wall Street Journal article in August 2021, discussing the “new generation” of “financial media stars.” To wit:
“As the U.S. retreated amid the pandemic to its couches, millions of would-be stock pickers—some flush with stimulus cash—fired up social-media and messaging apps and dove headlong into the world of retail investing.
Many of these influencers have no formal training as financial advisers and no background in professional investing, leading them to pick stocks based on the whims of popular opinion or to dispense money-losing advice.”
Since young investors wanted a “quick and easy” roadmap to make “big profits,” these online “stars” doling out free advice was the perfect source.
However, such should be no surprise given the near-vertical market advance from the 2020 lows. Young investors have increased financial risk with the “Fed” providing insurance against loss. We have noted some of these stories previously.
- Retail Investors Get The Majority Of Their Financial Advice From Social Media
- Investors Are Taking On Debt To Invest
- Long On Confidence and Short On Experience
- Retail Investors Flood The Market
As we noted then, the actions of retail investors were all too reminiscent of what we witnessed leading up to the “Dot.com” crash. However, you can hardly blame them, given this is the only investing environment they have ever known.
But therein lies the rest of the story.