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Crowd Trading

Sigma Investment Counselors

February 3, 2021

Crowd trading is an extension of the concept behind crowd funding, which is the practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet.  In crowd trading, a large number of people are encouraged to take a small position in a single “investment” in order to have a large impact on the price.  This is not investing.  Warren Buffett is an investor.

I’m not your mother, but if you feel you must join the “Robinhood/Reddit” crowd, please, please, cash only.  Do not, under any circumstances, open a margin account or borrow money.  As long as you stick to cash only, you might win, you might lose and you might learn something.  But you won’t dig a hole you can’t get out of.  Speculate if you must, but don’t risk a life changing loss.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA

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