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![]() ![]() “New Investors were younger, had lower incomes, and were more racially diverse than Experienced Entrants and Holdover Account Owners. In little more than a week from its January 28 high of $483/share, GME has declined about 87%, now trading at $47/share on February 9.Ī market study released by FINRA on February 2, 2021, reveals that the COVID pandemic “witnessed a surge in retail investors who entered the markets … via online brokers.” Of them, 38% were “New Investors” who never before had opened a taxable, non-retirement investment account. Firms are exposed to greater risk and therefore more likely to need to take such action during periods of abnormally high transaction volumes and price volatility. They may withdraw their services, in line with customer terms and conditions if, for instance, they consider it necessary or prudent to do so. ![]() These losses are unlikely to be covered by the Financial Services Compensation Scheme.īroking firms are not obliged to offer trading facilities to clients. The United Kingdom’s Financial Conduct Authority issued a statement:īuying shares in volatile markets is risky and you may quickly lose money. “Following the Crowd: Investing and Social Media,” (FINRA Jan. 29, 2021) is here.įINRA issued its Investor Alert cautioning against emotional trading not aligned with long-term financial means and goals, among others. In certain circumstances, broker-dealers may determine not to accept orders where a transaction presents certain associated compliance or legal risks.” The SEC Investor Alert (SEC Jan. This may be done for legal, compliance, or risk management reasons, and is typically discussed in the customer account agreement. ![]() The Alert reminded investors that “broker-dealers may reserve the ability to reject or limit customer transactions. The SEC warned of “the significant risks of short-term investing based on social media, especially in volatile markets” – and particularly in small-cap stocks and/or with leveraged by margin or options. In that week when GME swung wildly from $76 to $347 per share, regulators issued several investor alerts warning about the risks of short-term trading in volatile assets. “What We Talk About When We Talk About Stonks,” Slate (Jan. It’s an emotional onomatopoeia for talking about people throwing their money at the market when, lol, nothing matters.” “t a moment that the markets are being overrun, for better or worse, by posters who’ve basically dedicated themselves to shredding the idea that markets are efficient, rational mechanisms for allocating capital and discovering value, tweeting about stonks seems far more appropriate than discussing something as reasonable and comprehensible as stocks. During the height of the GameStop (NYSE: GME) mania, Slate author Jordan Weissman explained that ![]()
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