Is the cashed up Reddit army forming for a new charge?

With US$1,400 stimulus cheques in the mail to millions of Americans, the cashed up Reddit army looks poised to strike again.
The post Is the cashed up Reddit army forming for a new charge? appeared first on The Motley Fool Australia. –

young woman sitting cross legged with large tub of popcorn and surprised facial expression

You may have heard that our counterparts in the United States are about to receive some fat cheques in the mail, courtesy of Uncle Sam. It’s all part of the US$1.9 trillion (AU$2.5 trillion) pandemic recovery bill US President Joe Biden managed to get through Congress. And it will see every eligible person (those making less than US$75,000 per year individually or couples making up to US$150,000 per year) receive a stimulus cheque of US$1,400. If your kids or dependent parents live with you, they get a US$1,400 cheque too.

While similar measures haven’t been embraced by the Australian government, come tax time many Aussies will see a big lift in their tax refunds.

Many analysts are predicting this could be the fuel that ignites the next retail army trading craze.

Cheques set to pour into shares

As Bloomberg reports, Sam Stovall, the chief investment strategist at CFRA Research says the government stimulus cheques “could offer a short-term ‘shot in the arm’ to a market that was otherwise looking run-down and vulnerable to a sell-off.”

Eric Liu, co-founder of Vanda Research, agrees. He said, “stimulus checks will almost certainly drive more retail buying. The social media attention has remained strong.”

A Deutsche Bank survey earlier this month revealed that 50% of individuals in the 25–34 age range who have brokerage accounts expect to use half the money from the stimulus cheques to buy shares.

Twenty-eight-year-old actress, Iyana Halley, falls right into that category. She says (quoted by Bloomberg):

I probably will take about half of it to invest into stocks… I want to see what will make the most sense, where I can get the most out of my money. I’m still new to the stock-market world, so trying to figure stuff out.

She said she uses guidance from trusted friends and social media to help decide which shares to buy.

That kind of investment attitude has Kimberly Woody, a senior portfolio manager at GLOBALT Investments, sounding a cautionary alarm. According to Woody, “you could say it’s like gasoline on a fire. [It’s] participation from a lot of folks that really just don’t know what they’re doing.”

Wise words…

GameStop stalled…but not out yet

Now the new wave of cashed-up Reddit traders hasn’t hit the GameStop Corp. (NYSE: GME) share price yet. Perhaps the loose collective of retail trader will find another share to target. Or not…

Yesterday, overnight Aussie time, GameStop shares plummeted 16.8% to US$220.14 per share. In after-hours trading, shares are down another 1.2%.

That’s a big daily loss. But it’s not even close to erasing the meteoric gains GameStop enjoyed this year. Over the past month, shares are still up 345%. And since the beginning of 2021, the GameStop share price is up a stellar 1,176%.

Where will the Reddit army deploy next? Stay tuned.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Is the cashed up Reddit army forming for a new charge? appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!