During the current lockdown, individual investors have been rushing to buy stocks. In a way this is good because the stock market is the greatest money making machine ever created. On the other hand, individuals who have just signed up to buy stocks online are rushing in blind and will get burnt with absolutely huge losses.
Case in point is the whole Zoom Vs Zoom fiasco.
Most people working form home will have used Zoom for online meetings. The video chat platform has become so ubiquitous that the word zoom is quickly becoming a verb. Just like how the word Google became a verb for web search, Zoom is becoming a word for online video chat.
With its popularity, individual investors have rightly taken notice of Zoom.
But unfortunately, many individual investors have been buying into the wrong company. Instead of buying into the video chat platform that trades under the Ticker ZM, they have been buying shares under the ticker ‘ZOOM’ which belongs to a Chinese company that makes parts for mobile devices. The accidental purchase of the wrong Zoom shares rocketed the price of the lesser-known company up by 1800%.
Just go and look at the ZOOM share price vs the ZM share price to see what I mean.
Luckily the SEC has now stepped in and removed Zoom from the stock market. But investors in Zoom will have been burnt.
This is nothing new. I have written before on COKE vs KO with retail investor appearing to buy the wrong coca cola stock. Investors piling into COKE will have a rude awakening when that pile of dominos drop.
This is why it is important for everyone to know exactly what they are investing in. Just because an app let you trade the stock market at the touch of your fingertips, doesn’t mean it is a good idea to jump right it. It is better to read and gather information and educate yourself before delving into the stock market. I repeat again, educate yourself and stay informed.