The rise of fee free stock trading apps such as Freetrade have been a boon for investors. They have democratised investing by giving everyone a chance to invest in the stock market and own the best businesses in the world.
But like with most things, they are certain drawbacks. I feel the ease of use and the free nature of these apps, coupled with lockdowns, boredom and economic pains have allowed gamblers to enter the stock market. They are bidding up anything and everything. They are treating investing in the stock market like it’s a game cheering every up move in the stocks they invest in without giving a second thought as to what those ticker symbols represent.
Case in point Signal.
Over the past week, many people have ditched WhatsApp for Signal; a rival messenger service. Why they are ditching WhatsApp I have no clue as the app is simply updating T&Cs to meet updated regulations. But that’s besides the point.
‘Investors’ have caught on to this trade and have been buying Signal shares hand over fist. Shares in Signal have increased over 10,000% going from $0.60 to $68.50 a share over the past week
This may sound all well and good, the company’s share price increases as it becomes more valuable due to more users. That is until you realise that they are bidding up the stock price of the wrong ‘Signal.’ These investors have been buying stock in ‘Signal Advance Inc’, a manufacturer ofvarious detection devices.
A simple google search of ‘who owns the signal messaging app’ would have let them know that that company is private. It’s shares are not trading on any stock exchange!
It just goes to show markets are full of gamblers hoping to make a quick buck. They are buying shares without any research or due diligence. They spend more time researching a washing machine or a games console than stocks. But the financial consequences of the latter will outweigh the formers by a meaningful amount over time. This can only end one way – badly!