A year ago, the GameStop frenzy took hold over the stock market. An army of DIY investors pushed up the prices of certain stocks, elbowing out hedge funds that were betting they would fall. At one point, shares in some firms had rocketed by 1,000pc. For those who bought early, it was hugely lucrative; for others, a 68pc drop from its all-time high has been painful.
Adam Thornton, a 23-year-old software developer from Chorley, is one of the many British investors who are still holding on to the shares.
“I bought them at $150 when my friends were talking about it last year. It went all the way up to $325, but I never sold,” he said. Now it’s back at $105. “I’ve never had an exit strategy, which is always the problem.”
DIY investors are still concerned that they could be missing out on the next wave of speculation to push the stock to new dizzying heights. Broker Hargreaves Lansdown found that GameStop’s stock ranked second by net buys among its users last month.
Mr Thornton invests most of his savings into passive funds, which track the performance of the wider global market. “But after that I still have a spare bit of money, so I thought: why not give picking individual stocks a go?”
Mr Thornton now steers clear of stock tips on Reddit, a forum where the community of DIY investors that pumped up GameStop stock originated last year. “I look at message boards on Yahoo Finance and Stocktwits,” he said.
“My friends and I have a group chat on WhatsApp to talk about penny stocks too. We have fun with it but we mostly just lose money. My best one so far has been Netlist. I bought it at $1…and made about £700.”
Ryan King, a 24-year-old accountant from London, said that a desire to chase such big gains following the GameStop saga had led to a surge in traffic on his social media pages, where he promotes the virtue of investing to more than 40,000 followers under the banner of “Making Money Simple”.
“After the meme stock craze, there was a big uptick in interest in investing,” he said. “People were messaging me and asking how to open Isas and get started. It’s the same with cryptocurrencies – when Bitcoin reaches new highs, as it did last year, it catches attention.”
But unlike many so-called “finfluencers” who tip stocks online with the promise of big gains, Mr King said that he preferred to to advocate a more passive approach.
“I prefer talking about index funds,” he said. “For investors, being average is actually great. A lot of people want to beat the market, but tracking the performance of stocks through a global index will get strong returns.”
