Vigilante investors could end up ‘financially burned’: deVere CEO

Many vigilante investors who are being pulled into the social media frenzy to buy stocks could end up “financially burned”, warns the CEO of one of the world’s largest financial advisory and fintech organizations.


The warning from Nigel Green, the chief executive and founder of deVere Group, comes after shares of AMC jumped almost 40% Thursday as investors on the popular Reddit WallStreetBets board were once again pushing the stock in a bid to hurt short-sellers who have bet against the theater operator.


It follows similar moves that started in January when activist investors on Reddit pumped other out-of-favor firms including GameStop and BlackBerry.


Mr Green says: “There’s a certain vigilante mindset amongst those traders being drawn into this social-media frenzy to pump certain stocks.  


“They seem to believe they’re in a David and Goliath-style battle against Wall Street and, judging by some of the comments on the forum, it appears kind of personal. 


“They’re behaving like activists, not investors.  Frankly, those pushing these stocks don’t seem to care about it going up – instead they’re out to destroy the sellers.” 

 

He continues: “Heightened emotions, hype and hysteria and investing are rarely good bedfellows. I can’t help but think this is likely to end in tears for many activist traders.”


These forums have tapped typically inexperienced, younger people who might not necessarily have “the financial resources to be resilient against usually highly speculative and volatile investments” says Mr Green.


“Extreme caution should be exercised before joining stock frenzies of this nature.  The valuations can be expected to be wild – in both directions – and there’s a legitimate risk that novice investors could face a financial hit.”


Previously he has warned: “I would avoid piling into stocks pumped by social media influencers. 


“If you do want the thrill or novelty of chasing big gains, you really should ensure that you have a sound, diversified, long-term plan beforehand.


“There’s a major difference between investing and gambling.”


The deVere CEO concludes: “This kind of speculative day trading is becoming a global phenomenon. I don’t think this is a fad.


“However, in order to create, grow and safeguard wealth consistently to reach your long-term goals – which for most people is financial security and freedom – there’s no substitute for independent, professional, personal advice. 


“Balanced advice should be at the heart of the decision-making process – and then proceed as you wish.”

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The deVere Group of Companies, is licensed in various jurisdictions, however, the products and services offered by the respective entities may vary per jurisdiction. The deVere Group does not warrant, either expressly or implied, the accuracy, timeliness, or appropriateness of the information contained on this website. The deVere Group disclaims any responsibility for content errors, omissions, infringing material and any responsibility associated with relying on the information provided on this website. For more country-specific products and services offered by the deVere Group of Companies, you may wish to visit the specific national deVere website, if and where available. The information contained in this website is for general guidance on matters of interest only. The application and impact of laws can vary widely based on the specific facts involved and your country of residence. Before making any decision or taking any action, you should consult a deVere Group Financial Advisor.

© 2010 – 2023 deVere Group. All rights reserved.

© 2010 – 2023 deVere Group. All rights reserved.

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