The acute volatility has encouraged many to bet speculatively on the markets whilst they have been bored on lockdown at home. Crypto currencies are prime targets but also the tech stocks in the US where novices see that they can only go upwards, epitomised by their favourite, Tesla and it rockets into space and for only a few pounds or dollars, they believe they will emulate that. Sadly, twenty-year old Alex Kearns took his own life. He could not cope with having speculated on something which went so horribly wrong and which he thought had lost him $730,000 (which he didn’t have). In fact, his account was still in credit and he had miscalculated the trade he had placed.
This is a very sad matter. What the firms offering these opportunities have realised is that all the younger people (especially) are keen on pressing buttons and playing online games and this is just another way of doing that. The entities feed information to ‘players’ constantly, updating their positions and they begin to wait on any and every last piece of information as if they have gained some imaginary skill at the game. Exaggerated by a Social Media frenzy and the players exchange thoughts, followers and actions leading to more addiction. A little confidence in a few which win and this sucks the speculator deeper into the experience. It’s great that such cheap ways of investing exist but DAY TRADING IS NOT INVESTING. You cannot predict what is going to happen on the one day and trade at a profit consistently simply by playing with the small movements which may arise on that day. Oh sure, there are lots of pretend theories out there and ‘if you use sophisticated algorithms you’ll beat the market’ but what a load of twaddle, to be frank. Yes, there can be technical trading opportunities from time to time and we look to take advantage of those if we can in our management of our clients’ funds but this is not that. Oh yes, Tesla was around $200 a year ago and is now almost $1500 and as buyers crowd-in, there is only one way for the share price to go till that all turns and burns. (Yes, a company which is not earning a profit yet and is now ‘worth’ more than Toyota, the biggest car producer in the world, or bigger than Exxon Mobil).