r/WallStreetBets founder details ‘one thing about the stock market’ that you learn yourself [Video]

The retail community continues to move stocks more than a year after the initial meme stock mania in early 2021.

The founder of r/WallStreetBets, a reddit forum for retailers to discuss stocks and options, had some advice for the community: The best financial education comes from hard learning.

“I learned a lot from my experience,” r/WallStreetBets’ Jaime Rogozinski told Yahoo Finance Live (video above). “There’s one thing about the stock market that no book can teach you, and that’s taking control of your emotions and being able to think rationally when you’re in a trade.”

Photo By: STRF/STAR MAX/IPx 2021 2/2/21 GameStop, AMC and Silver stock prices plummet as Reddit loses short squeeze steam.  STAR MAX photo: GameStop, AMC, Reddit, Robinhood, WallStreetBets, stock charts and logos photographed from Apple devices.

GameStop, AMC and Silver stock prices are falling as Reddit short-squeeze loses steam. (STAR ​​MAX, Associated Press)

Rogozinski stressed that traders of all levels, especially those new to trading, should not be afraid of mistakes. Losses are inevitable and are the key to gaining experience in the market.

“Often these retailers use smaller amounts of money,” Rogozinski added. “They can afford to lose 100% because we’re talking $100 or $50, you know? It’s the price of the tuition. They can go ahead, get their hands dirty and find what they like. “

A meme trade vs an investment

The subreddit r/WallStreetBets was founded in January 2012 and now has over 12.5 million members. The page went viral for its involvement in the short squeeze and the retail frenzy that sent GameStop (GME) stock soar in early 2021 and resulted in a congressional hearing.

“One of the things about retailers, WallStreetBets, is that it’s a collective,” Rogozinski said. “It is not an individual. The people come together and decide together.”

Rogozinksi explained that retailers tend to be younger and more “hands on” with their finances.

On r/WallStreetBets, “they can learn this in a fun way by speaking a language that makes it accessible,” Rogozinski said. “I often say that… the concepts that CFAs, Certified Financial Analysts, have or… [those with a] master, they just have a lot of jargon for concepts that are actually not that complicated. On WallStreetBets, you’ll have the exact same concepts, but they’ll have easier words, or they’ll have different words that sometimes make it more cartoonish, more fun, more meme-like.”

Gallup’s May 2022 survey found that 56% of American adults, totaling 144.6 million people, own stocks, including 25% of households earning less than $40,000 a year.

While many shareholders invest in the long term for goals like retirement, Rogozinksi noted that meme stocks are a different animal because of their unpredictability.

“These are not investments, these are transactions,” explains Rogozinski. “And so if you want to get into an extremely volatile trade like GameStop or a meme stock, you need to know how to trade it properly.”

A customer leaves a Bed Bath & Beyond store in Novi, Michigan, US, Jan. 29, 2021. REUTERS/Emily Elconin

A customer leaves a Bed Bath & Beyond store in Novi, Michigan, US, Jan. 29, 2021. REUTERS/Emily Elconin

Meme stocks are usually consumer-oriented companies that traders already have a relationship with, such as the aforementioned GameStop, AMC or Bed Bath & Beyond.

“You have to have a stake in a company that’s tangible and that retailers can identify with, not some obscure, I don’t know, chemical materials company,” Rogozinski said. “This is a store you can go to, this is a car you can drive, this is a chip you can put in your computer.”

Meme Stocks Have ‘Remembering Ingredients’

While r/WallStreetBets has been a breeding ground for the culture of meme stocks, Rogozinski doesn’t consider himself a meme trader.

“I have a very specific style of trading, and it’s not meme stock trading — I’ve never quite understood that,” he said. “But I’m definitely enjoying what’s happening, and it’s definitely a whole new phenomenon that I’m not sure a lot of people have really mastered.”

Rogozinski’s comments came at the height of a meme-driven rally in Bed Bath & Beyond (BBBY) stock. Subsequently, the retailer’s shares fell sharply after activist investor and GameStop chairman Ryan Cohen liquidated his 9.8% stake in BBBY for $68 million.

At the time, the shares were pushed to a high of $28.04 on Aug. 16, before falling 30% the same day. Since then, activity in the stock has cooled somewhat, although the stock still rose more than 92% in August.

Although Rogozinski hadn’t personally invested in Bed Bath & Beyond, he was still “on board” with the idea of ​​it as a meme stock trade.

“You can see it has a lot of similarities with GameStop,” Rogozinski said of the hype surrounding the brand and its trading volume. “We’re getting a lot of ingredients that are reminiscent of what we saw at GameStop.”

Luke is a producer for Yahoo Finance. You can follow him on Twitter @theLukeCM.

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