Recent events and media coverage surrounding the rise of Robinhood and Reddit suggest that many investors, particularly those recently attracted to stock market opportunities, may not only lack experience but also have a very limited understanding of the regulatory environment. Individual and institutional investing activities are subject to a wide range of rules and regulations that govern almost all securities transactions. Rushing into participating in stock trading, solely on the advice of Reddit and other social media sources, without first familiarizing oneself with how markets function, has the potential to lead to misunderstandings and to end badly.
This doesn’t mean that you need years of study, nor does it mean that you have to hire an advisor, although that might be a good idea if you’re thinking of committing significant dollars, but it does suggest that it might be smart to read the fine print and proceed cautiously as you gain experience.
Kenny Rogers’ big hit, “The Gambler,” includes some good advice, specifically, the admonition that, “…if you’re gonna play the game… you gotta learn to play it right.”
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA