Mom N' Pop Investors Are Buying Stupid Stocks. Their Journey Will End In Tears: Billionaire Investor

Discussion in 'Must-Read Interviews, Articles & News Items' started by Arjun, Jun 20, 2020.

  1. Arjun

    Arjun Chief Executive Officer (CEO) Staff Member

    Mar 19, 2015
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    Move over Warren Buffett, I am the Captain of the Ship now

    When Warren Buffett held sway over Wall Street and Dalal Street, there was a semblance of discipline. Amateur investors were forced to abide by the principles of value investing and buy only those stocks which had a margin of safety.

    However, Warren's declining influence and the coup by Dave Portney (a trader with a follower base of 1 million+ on twitter) has turned the tables.

    "Warren Buffett is washed up. Iā€™m the captain now," Portney proclaimed, without much resistance or objections from anyone.

    Inspired by Portney's reckless rhetoric about how "stocks only go up", Mom and Pop investors are buying all sorts of alleged Garbage stocks.

    One of their favourite stocks is Hertz, a company which is in bankruptcy and is worth zero.

    The stock is surging like a supersonic rocket.

    Yet another unknown stock named Nikola Corp is surging and has a mammoth market capitalisation of $28B even though it has no sales or revenue.

    Kachra stocks give 850% gain on Dalal Street

    Mom and Pop investors are also thronging Dalal Street and aggressively buying stocks that sensible investors would not touch with a barge pole.

    According to a report by Mousumi of CNBC, junkyard stocks like Alok Industries, Suzlon Energy, Sintex Industries etc have given multibagger gains in excess of 850% in just the last few months.

    Other garbage stocks like Prakash Steelage, Zentih Birla, Ruchi Infra, Manaksia, Brightcom etc have also given sensational returns to the amateurs.

    These are not investors. They are gamblers: Vijay Kedia

    Naturally, veterans like Vijay Kedia are seething with rage at the reckless behaviour of the Mom n' Pop investors.

    ā€œThese new entrants in the market call themselves traders or investors, but I prefer to call them gamblers, who now have the legal rights to bet in the stock market,ā€ Kedia fumed.

    They are just doing stupid things. It will end in tears: Leon Cooperman

    Vijay Kedia's warning is echoed by Leon Cooperman, a Billionaire investor on Wall Street.

    "They are just doing stupid things, and in my opinion, this will end in tears," he said plainly.

    Cooperman pointed out that many new investors are replacing gambling and sports betting with trading.

    "The gambling casinos are closed and the Federal Reserve is promising you free money for the next two years, so let them speculate ... Let them buy and trade. From my experience, this kind of stuff will end in tears."

    Amateurs are being set up by the Pros: Jim Cramer

    Jim Cramer has floated the theory that the pros on Wall Street are taking advantage of the naivety of the amateur investors and dumping garbage stocks upon them.

    "They buy in the early morning and then they flip it to Robin Hood types when the market opens and they make money," he explained.

    "They're fomenting action. Once you foment action, it brings in suckers and then maybe they'll buy the stock thinking that there's something going on," he added.