Introduction
Have you read about investing on Reddit? WallStreetBets is driving stocks like GameStop, AMC Entertainment, and Blackberry to the moon. It’s controversial but I’d still add the WSB subreddit to my daily investing resources.
There are tens of thousands of Redditors who are interested in investing, and many have the potential for high success. Many people on Reddit post about their trading successes and failures, but there is little to no knowledge source that compiles it all.
Reddit investing phenomenon
WallStreetBets is a subreddit with a small but devoted following of amateur DIY investors who are quickly becoming a force to be reckoned with in the stock market. The subreddit is a place where users can share ideas and tips, as well as ask for advice from other members.
At first glance, Reddit WSB looks like just another forum — something that anyone can post on without much thought. But there’s something more to it: the community has recently experienced explosive growth thanks to its unique approach to stock picking.
A number of the forum’s most popular stocks were volatile and now face legal trouble. GameStop, AMC Entertainment, Blackberry, and Express all saw massive rallies before dropping back down.
Ignore fundamentals
The Reddit trading forum’s members are loosely organized around a collective investment strategy that ignores traditional fundamental analysis. They prefer to bet on short-squeeze plays, often borrowing money from Robinhood, a commission-free investing app popular with young traders.
Robinhood is a good option for people who are new to investing because it’s easy to use and doesn’t have any trading fees. It also has no minimum balance or account minimums so you can start with just $1 and build your portfolio from there.
The stock market isn’t a level playing field.
The stock market is tilted against individual investors and favors hedge fund managers who use complicated strategies to make easy money.
Hedge fund managers invest in more information than you and I do, which gives them an advantage over us. They have more money to invest, so they can hire more analysts and employ more sophisticated trading strategies. They also often use complex algorithmic trading programs that give them additional advantages over individual investors like you and me.
Another aspect of the WallStreetBets philosophy is the idea that it’s better to gamble big than to risk losing everything.
“Scared money don’t make no money,” says one popular post on WSB when explaining why they can’t invest in green energy stocks like Plug Power Inc or Bloom Energy Corp. “We will die by the sword”
u/chriscord03
The WallStreetBets investing philosophy is a simple one: the only way to make money is by taking risks, and if you’re not taking risks then you’re not really gambling.
As u/chriscord03 explains it in one of their most popular posts on Reddit, “The truth behind why we invest in penny stocks (and when we don’t)”: “We have nothing to lose but our ignorance.”
There are countless other examples of this philosophy at work throughout the site. In one thread about how much money they’ve spent on cryptocurrencies since starting out with bitcoin back in 2010, a user named u/rajbela said that it was over $100k by now, having invested first and foremost because “I didn’t have anything else better to do.” He added: “I’m still under 40 years old so I’m hoping there’s plenty more time for me to recover from any losses.”
Massive gains
Users on WallStreetBets are more concerned with making massive gains than protecting their principal investment.
WallStreetBets is a subreddit with a small but devoted following of amateur DIY investors who are quickly becoming a force to be reckoned with in the stock market. They’re not worried about losing money, just making it. This is the first time that I have seen such an enthusiastic community of DIY investors — they share tips on how to make extra money from their day jobs, talk strategies about investing in stocks and options, and even offer each other emotional support when things go wrong.
“Because [I] wanted to double down and make more money than you could ever imagine”
Redditor u/TurdSandwich summed it up best when asked why they chose the risky stock options that got them into trouble.
