đź”’ Alec Hogg: Shades of ’87 in punter arrogance

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One of many videos on social media where suddenly-rich punters dispense their money making “wisdom” – click above for @TikTok Investors

___STEADY_PAYWALL___
I was at primary school during SA’s stock market crash in 1969, but those who saw it say small-time punters were bankrupted by the thousands. During the re-runs of similar movies in 1987, 1999 and 2008, however, my vocation gave me a front row seat. Watching the financial carnage was harrowing.

Also read: Alec Hogg: Netflix delivers, price +12%

Those stock market crashes scared off legions of small time investors, also delivering an unfortunate knock-on effect. Over time, investing in listed company shares is by far the best way to create wealth. But the scale of misery which market crashes visits on enthusiastic amateurs, isn’t easily forgotten.

Watching the TikTok video referred to in RP yesterday, featuring a couple of cocky daytraders (“here’s my strategy – I see a stock going up and I buy it…”) took me back to the weeks before those gigantic busts. The arrogance of their ignorance is breathtaking. Worse, with an entire generation is raised on FOMO (fear of missing out) simplistic formulae easily morph into a willing virgin’s mantra.

Also read: Alec Hogg: Fastest fingers first for this 12J

What makes the current stock market bubble so tricky to negotiate is the massive creation of money by governments to fight the pandemic. Newly minted cash always finds its way into investment markets. Inject gazillions and the price of risky assets get turbocharged. My message: Don’t get suckered: do your homework and stick to companies with business models you can understand. Most of all, let FOMO go.

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