Finally, the ugly part is that not only are gains magnified in a short period of time but losses are as well. The bad news is that there are now lots of ways to lose money in the stock market if you or your financial advisor don’t have finance. There has been a democratization in stock market investing. The good news is that the app is extremely user-friendly, and the average investor can now make money in the stock market in ways that, until recently, were only available to institutions like pension funds and mutual funds.
Q: Are tools like the investing app Robinhood (which offers no-fee stock trading) just a trend or an indication of a new direction for the world of investing?Ī: Robinhood is here to stay. For example, does GameStop really have cutting edge technology, or is its business model antiquated?
In other words, it’s OK to invest in a meme stock, but make sure you’ve done your due diligence on the company’s growth prospects.
#LINKEDIN STOCK ON ROBINHOOD PROFESSIONAL#
Investors, however, do much more research based on the fundamental financials of the company and assess the potential of the company based on either their analysis or input from a trusted, professional financial advisor. It’s really the equivalent of going to the racetrack and betting on horses or going to Las Vegas to play the slot machines. The vast majority of people buying these stocks are gambling that their price will go up based on rumors and social media posts, which can be very dangerous. Q: What can we learn from what happened with AMC, BlackBerry, and GameStop stocks? What does that tell us about the stock market and how people are interacting with it?Ī: It’s important to distinguish between gambling and investing. In the case of GameStop, the price had a tremendous run almost solely due to Reddit posts. Also, social media forums have made it a lot easier to follow trends. It’s partly pandemic-related, since some people had more time to gamble and speculate and may have extra money on hand due to government stimulus payments. There are a lot of reasons why meme stocks have been so popular. Q: What are “meme stocks,” and why have they become notable lately?Ī: A meme stock is any stock that’s seen its price skyrocket due to excessive trading volume from retail investors, mostly fueled by people on social media (primarily Reddit, TikTok, and Twitter).
What happened, and what could that mean for people interested or invested in the stock market?Īugsburg University’s Associate Professor of Business Marc McIntosh brings his financial expertise to help us understand some of these rapid changes and see the big picture of today’s stock market. In a matter of days, some of these stock values increased by up to 30 times their previous price before a smartphone app called Robinhood restricted trading, angering some investors and propelling the situation into greater media attention. In early 2021, stocks of the companies AMC, BlackBerry, and GameStop made headlines-but not just for performing well.
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