Earlier this year, born out of a meme, a group of young investors disrupted Wall Street and made GameStop, a video game retailer, one of the hottest stocks of the year.
Prior to the event, back in April 2020, GameStop was on a decline. It was facing mass closures. It was growing irrelevant in the age of online shopping, and the pandemic restrictions further hurt its revenue. Its stocks around the time can be bought for $3.25.By Jan. 27, 2021, the closing price of GameStop stock reached $354.83. As of Jul. 14, GameStop stock is still selling at $167.62 each. It was a moment that made headlines around the world.
For a while, the market was under the mercy of individual small investors, most of whom are young, and not the hedge funds and the big firms who controlled Wall Street. The event has never been seen before, and that is because the stock market has never been this accessible to the public. The small investors took control of their finances and navigated their way around the stock market using smartphone apps.
Apps Democratizing the Stock Market
Over the past couple of years, the number of young people who are venturing into investing in stocks has increased, and it is all thanks to technology. Apps like Webull, Fidelity, E*Trade, and, of course, Robinhood allowed regular folks to enter without using brokerage firms and participate in the stock market on their own.
There were no rules. The apps were open to all who want to get involved, amateurs or not. Fintechs (financial technology) also offers access to data in an easy-to-understand format and algorithm-based market predictions that assist the investor to make smarter decisions and get a better return on their investments.
It is changing the game for the small investor that, historically, has been at a disadvantage. An investor used to spend a long time looking up and analyzing market trends to ensure that they would not lose their investment. Now, everything that they will need – data, market insights, market predictions made by intelligent machines – are right on their smartphone screen. Apps have made the process much simpler for regular people who are trading on the side while still having a full-time job and fulfilling their roles at home.
Tracking Their Wealth
Moreover, through technology, investors can monitor their own investments. Apps give the investor access to their money whenever and wherever. But, even those who go through banks and brokers gain better control of their investment through technology.Investors can go online using their smartphone or laptop to view and modifyUnit Investment Fund or UITF investments, even after banking hours.
Small Players Collaborating
In addition, technology is allowing small investors, who are vulnerable to make mistakes and lose money from trading, to collaborate. Many investors use social media to seek advice from their peers and make better investment decisions.In fact, that was how the GameStop event came to be. Users of the sub-Reddit r/WallStreetBets decided to band together and buy stocks of GameStop last January. The community had over 10.5 million members at its peak, and, on the platform, they shared memes and discussed stock and option trading.
It is not unusual for amateur investors to seek advice from others via the internet. MagnifyMoney earlier this year conducted a survey among Millennials and members of Generation Z. The survey revealed that six out of 10 young investors participate in online investment forums such as Reddit. Nearly half of the over 1,500 respondents admitted that they turned to social media at least once in the past month to conduct research that will inform their investment decision.
Aside from Reddit, young investors are also using YouTube to learn more about investing. About 41 percent turn to YouTube to gain more information. TikTok, Instagram, Twitter, and Facebook Groups also made the list. Many young investors started investing before they even turned 18. Among members of Gen Z, 22 percent were younger than 18 when they made their first investment. Among Millennials, 8 percent were younger than 18 when they started investing.
However, only 36 percent of young investors plan to save the money they get from the venture for their retirement. Most of them want to eventually withdraw their earnings and make a big purchase such as a car or a house. Technology is changing the stock market. It opens doors for more people to participate, and change it from the once exclusive club made up mostly of bankers and other financial experts. Those who want to take their chance can easily download an app, and start trading regardless of their experience, what they know of the stock market and their financial status. It is also offering opportunities for young people to start investing as early as possible.
