Investing In 2021: Avoid Volatile Stocks
The recent GameStop stock saga has shaken confidence in the stock market, but experts say long-term investments are still a safe bet. NBC's Dan Scheneman reports.
(NBC News) — Instead of using the market to make money, some investors have recently used the market to make a statement.
Rogue day traders teamed up to inflate the value of GameStop and other fledgling stocks that major hedge funds were betting against. Their success drew in lots of first-time investors hoping to make a quick buck.
According to Investopedia’s Caleb Silver, it also hurt faith in the system.
“The mania around day trading and some of these very hotly traded stocks also left a bad taste in the mouth of a lot of our readers,” Silver says. “Almost 50%, 45% say they trust the stock market less today than they did six months ago.”
Silver has a word of advice to small investors: Stay away from volatile stocks.
“Day trading, especially very hotly traded stocks that have a lot of volume and volatility, is a great way to lose a lot of money,” he warns.
Instead of trying to make a quick buck on the latest “hot” stock, Silver suggests a different path.
“If you stick to your plan, investing for the long term usually pays out,” he says. “The tortoise always beats the hair when it comes to long-term, investing.”
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