ALBUQUERQUE, N.M. (KRQE) – It’s been a wild couple of weeks on Wall Street as amateur investors got together on social media, bringing stocks like GameStop soaring. The trend may get people trying to make a quick buck, but local experts say, don’t expect the strategy to last.
“They just saw an opportunity where a lot of these hedge funds have these short positions where they basically borrow stock from their broker with the hope that the stock price is going to go down,” said financial expert, David Hicks, with the investment firm Oakmont Advisory Group.
Wall Street investors piled on bets that video game retailer GameStop would fail, but when new investors came in they bought those stocks and increased the stock price from $4 to $200. This made big investors lose billions of dollars since no one expected an increase like that. Hicks says risks like that aren’t something that will make you money in the long run.
“Utilizing a strategic allocation plan that’s long term, where you are trying to minimize as much risk as possible and be exposed to some upside but you certainly don’t want to bet or gamble away your retirement savings,” said Hicks.
The “stick it to the man” mentality Hicks saw last week with Gamestop and AMC is called day-trading and isn’t reliable for the average investor. Hicks says you shouldn’t see any huge negative impacts from this surge but it could change regulations in the future to prevent something like this from happening again.
GameStop has already dropped in price from from that original surge.