The Coronavirus pandemic has had the marketplace performing more swings than roundabouts in the last year as global economies struggle to regain their footing. Even seasoned professionals have taken a hit and entire hedge funds have needed bailing out on the back of the GameStop scandal. It’s no doubt that the stock market is a volatile place to navigate at the moment, but this doesn’t seem to have put the millennials off.
They don’t seem to be the only ones either. Gen-Zers are also sliding in on the action, using the technology they have grown up with to their advantage alongside an abundance of time spent at home, to start trading stocks online.
These novice investors are flocking to online trading apps like Robinhood and eToro, both of whom saw rapid growth of 300% and 220% respectively in the first quarter of 2020 and this surge continued to climb as the pandemic wreaked its havoc. But their investing style differs wildly from the slow and steady approach that seasoned investors have employed for so long. When it comes to these generations, it’s the momentum stocks that curry favour, buying into fast moving stock and jumping off before the stock dives. This is a high risk strategy that requires the sort of fearless exuberance that only the young possess.
However, there is a dark side to all this. The collusion experienced on sites such as Reddit, TikTok and Discord is raising questions about the potential for wrong doing. Pros who have spent lifetimes meticulously studying the marketplace are being beaten at their own game and some believe there is nowhere for the market to go but down. Certainly this is the case for GameStop, whose shares have already started to drop in value. Even the real Wolf of Wall Street has urged amateur investors to be wary; “Be aware of being the last person on the bandwagon, that is really the danger here.”
Antonia is the Financial Editor at InvestingReviews.co.uk and brings a wealth of experience, having written for various industries over the past 10 years.
Her investment platform reviews, news, blogs and guides are meticulously researched, fact checked, and updated on a regular basis.