SIOUX FALLS, S.D. (KELO) — KELOLAND investment companies are sorting through what happened on Wall Street this month with a spree of “flash mob” trading. Online investors went on a buying frenzy that drove up the stock of the video game retailer GameStop by a factor of more than 1,000%. Local financial advisors are cautioning you against getting swept up by the lure of instant riches, without first doing your homework.
The buying binge of GameStop stock might only be the start of a new round of online investing on Wall Street.
“And these won’t be the last ones that we see as we continue on, they’ve happened in the past, it’s just truly, truly important to understand and to take the time to look into well, why is this,” Edward Jones Financial Advisor Travis Schuring said.
Small investors flexed their financial muscle through social media platforms like Reddit and purchased stock in GameStop, upsetting the portfolios of large hedge funds that were betting on the stock to fall.
“There are a lot of different factors that are driving it, not necessarily one movement or a group of individuals. There’s a lot that’s going on with a new administration, new policies that are going to be moving out,” Schuring said.
Local Edward Jones financial advisor Travis Schuring says social media can be a starting point for investing information, but you’ll need to dig deeper in order to make sound investments.
“Look at where this information is coming from. Is the information credible? Look at multiple sources, reach out to experts,” Schuring said.
Schuring says it’s easy to get caught up in the euphoria of a stock that’s soaring in price. But short-term gains can quickly vanish. That’s why Schuring says investors should never lose sight of their long-term financial goals.
“Put that long-term perspective on it and it will help you sleep a lot better at night,” Schuring said.
GameStop stock went down Thursday after some trading platforms restricted trading in the company.
GameStop has three locations in Sioux Falls, including The Empire Mall.