The recent trading bonanza in meme stocks like GameStop GME, -17.94% and AMC Entertainment so far has been a losing bet for Héctor Medina Camacho, a 26-year-old administrative assistant working in the healthcare industry. However, you are gaining insight into the hard-earned market that you hope will pay off in the future. As GameStop shares peaked at $ 483 on January 28, it fell to $ 60 at the close of the market on Monday. – Financial literacy experts hope that will be the case for anyone who has been swept up in the frenzy.
Medina Camacho lives in Sacramento, California, and has traded on and off since 2018. He acknowledged that he may have been rushing to make the purchase, spending approximately $ 550 for his 36 AMC shares and $ 600 for his three GameStop shares. He bought the shares between January 27 and February 3, he said. At the close of the market on Monday, Medina Camacho lost more than $ 700 in his shares of AMC Entertainment AMC, -17.12%, the national movie chain, and GameStop GME, -17.94%, the video game retailer. Both stocks were at the center of Wall Street‘s recent wild ride, powered by Reddit’s WallStreetBets, a forum for investors seeking big returns. Now his plan is to keep stocks to see what’s next, especially since the mass vaccination efforts will hopefully send viewers back to theaters. Another strategy is to prepare to average down – buy more shares at a falling price to lower your base cost per share. “I should have had more patience before jumping in,” he told MarketWatch. Like many others, he is angry at Robinhood, one of the investment apps he uses, for limiting operations at a time. It left open the possibility that he, too, might be angry with himself. So are you done playing the market? Nah. “It does not discourage me from negotiating in the future,” Medina Camacho said. In fact, you want to learn more. He is hardly alone. About 44% of the 1,600 self-directed investors at GameStop and AMC had less than one year of business experience and another quarter had up to two years of experience, according to a survey by Cardify, a consumer data firm; Perhaps most worryingly, 45% of investors surveyed said they were looking for a quick financial profit, according to the survey. Financial literacy experts express concern and joy at GameStop Medina Camacho’s willingness to risk that has not changed; you only trade money you are willing to lose, he said. But you want to train yourself to think longer-term and learn more about the fundamentals of business. Medina Camacho already analyzes whether a stock is overbought or oversold to detect possible bargains and smart sales. You also want to stay up-to-date on what people are saying about stocks on Facebook FB, + 0.33%, Twitter TWTR, + 3.29%, and Reddit, even if you’re taking it with a grain of salt. But isn’t that last part just accepting the rumors that could leave Medina Camacho lost again? “If there is an opportunity, I take it,” he said. “You can always make money from these kinds of trending and hype actions.” And that’s why some financial literacy experts say the GameStop series could be both a blessing and a curse. It’s about juxtaposing an appetite for profit with a knowledge of financial literacy that, at least so far, has been lacking nationally. The uneven mix could put new investors in serious financial danger if things go wrong. ‘Broke Millennial Bets On Investing’ “It’s encouraging to me that interest in learning about investing is growing,” said Erin Lowry, author of the “Broke Millennial” book series on personal finance. “But hopefully this event won’t make the market look like it is plagued with ‘get rich quick’ schemes to a typical novice retail investor.” As the GameStop business grew, Lowry noticed an increase in sales of his book “Broke Millennial Takes On Investing.” “While I am concerned about the fallout from GameStop, there seems to be a renewed sense that the average person with no financial background or Wall Street experience can invest,” he said. Don’t Miss: These are the top TikTok accounts that are fueling the stock market buzz for younger investors.Retail investing was already on the rise in 2020, long before GameStop operations took center stage. Investors opened 10 million new brokerage accounts in 2020, a year that spawned the term “retail brother.” But only 55% of Americans said they owned stocks according to a Gallup poll last year, which is about the same ownership rate as in the past 10 years. In roughly the same period, the FINRA Investor Education Foundation said that from 2009 to 2018 there was an 8% drop in the people who could answer most questions about interest rates, inflation, bond prices, financial risk, and rates. mortgage, going from 42% to 34%. Bottom line: There is a link between “financial fragility” and a weaker understanding of basic financial concepts, according to a recent study. ‘Only invest with money you can afford to lose’ On Friday, a trending thread on WallStreetBets was titled “People in this sub should understand that you only invest with money you can afford to lose.” “I can see the comments of [a] single mother who puts up her life savings and college kids borrow money at a very high interest rate and do it all, ”the original poster read. “This is not a joke. Losing money is not a joke. If you get a loan and buy a stock, you take a risk.” Read: ‘My family won’t let me go hungry’: Two young merchants reveal the dangers of trying to ride the epic wave of GameStop. Zendel, CEO of the National Investor Association, a nonprofit organization geared toward investor education, which had a growing membership in 2020. “Too many are missing the building blocks of wealth creation due to the lack of knowledge, exposure and opportunities. “The last two weeks” have once again demonstrated the power of the individual investor, “Zendel said. Like Lowry, Zendel sees a mixed bag in meme stocks.” We’re hopeful people didn’t get burned out on this one. situation, sparked their interest in the market and they learned about the need to invest instead of gambling, “he said. Zendel had a little advice for Medina Camacho:” Ignore the noise of get-rich-quick schemes and invest for the long term. ” It’s good advice, “Medina Camacho said. Still, he added, if investors keep their eyes on stocks to see what is potentially overbought and oversold,” it can make money.