What's up, graham, it's guys here, so how would you like to double your money by uh this time tomorrow? Well, if that's the case, ignore warren buffett throw all the conventional investing wisdom out the window and instead look no further than reddit. That's right: within this small tight-knit community of 10 million users, there appears to be a hidden formula to finding the next big 10 bagger, which includes the likes of clover health investments up 76 in 24 hours wendy's. Yes, the fast food chain with square hamburgers up 25 wish the e-commerce platform up 50, all of which have garnered the front-page headline of every major business publication. That's got to leave you thinking what's going on, how do they find out about this early enough to invest and, most importantly, are there any chicken attendees left for the rest of us? So, let's cover all of that and more on this episode of the sec is cracking down on the gamification of stocks and why i'm canceling robinhood, because i've had some issues with him that i have yet to talk about publicly until now, but really quick as usual.

Before we start, it would mean a lot to me if you crack down on that like button for the youtube algorithm by regulating it until it turns blue plus rumor, has it that for every one like this video gets, a short seller loses a dollar. So, thank you guys so much and now, let's begin so before we go into all of these tantalizing money printing details, we first got to talk about meme stocks, see in the olden days of investing in the long long ago, last year, investing was based on a Company's core fundamentals of expected growth, earnings, net profit and cash flow, and from there you would make a calculated investment in terms of how undervalued you felt they were. But today it's almost as though the traditional investing advice no longer applies, because the stocks that are doing the best, at least in the short term, have absolutely nothing to do with fundamentals at all. But instead they're based on a combination of sudden investor, enthusiasm, short seller interest and the potential to make a lot of money very quickly, which you could then post on reddit for internet points that unfortunately, don't have any cash value.

Okay, but seriously meme investing, has sparked the entire growth of a community dedicated to finding beaten down overly shorted stocks, that, with the right catalyst and enough momentum, could skyrocket in price, cause short sellers to lose billions of dollars and make the people who bought in early Really rich in the process, lately the attention has turned to a mixture of gamestop, which recently came back above 300, a share amc which rose in price and the expectation of a hedge fund, short squeeze and now clover health, which is said to be experiencing a gamma Short squeeze with over 43 of their shares being short, along with wish going up in price from a 51 short position, or in other words all you need to know is this credit users are looking for overly shorted stocks and precarious positions that hedge funds believe will Be going down in price and then they begin buying them up, causing retail momentum to drive the price even higher, causing hedge funds to have to cover their positions, which causes the price to rise even higher and higher and higher. It's pretty much. The stock market version of putting mentos in a coke bottle and then watching it explode, except with money. But critics of this say that it's not investing it's gambling and they blame the surge of meme investing on the apps that make it all possible to begin with.

Like robin hood in the last 30 days, despite stocks, like amc being up, 465 games, stop 109 blackberry, 94 and build-a-bear 132. The sec says that they want to crack down on the gamification of stocks with a new regulatory layer that would directly impact some of the most popular stock trading, apps being used right now to process these trades. Their thinking is that, at some point, these stocks are going to come crashing down. Just like gamestop fell from 483 to 40 dollars in three weeks or like how originally amc dropped from its january high of twenty dollars down to a low of five dollars, because just as easily as you could make a lot of money, you could also lose a Lot of money - and that's where all of this begins.

The sec recently said that they're worried that these stocks are too easy to trade on robinhood and elsewhere, and that investors could be setting themselves up for massive losses. He then went on to say that one of the ways to deal with the gamification of trading is to force brokers, to act more like fiduciaries, as opposed to passive trading platforms that merely process traits for them. It would really be no different than putting a warning label on an alcoholic drink or a parental advisory sticker on a cd. Remember those - and in this way a brokerage would be less likely to incentivize you to make such trades when they themselves benefit from the data that you give them.

Instead, a brokerage would, as they say, look out for your best interest and make you aware that hey, you might lose some money on the stock. But as long as you check this box and agree there you go now, you can give us your money. Some brokerages have even tried to get ahead of the curve in advance before they happen like, for example, the free stock trading, app public places, a high risk tag on certain stocks and a warning that comes up that you have to acknowledge before proceeding forward from there. You can still trade whatever you want, but at least you better understand the risks.

The issue that robin had previously faced was that the sec said that they made investing a little bit too easy and a little bit too similar to gambling by giving their users free stocks held within a scratch-off ticket that reigns confetti in this case. Investing feels a little bit more like a game with the screen, flashing, red or green, depending on whether or not you gained or lost money, which, i will admit, i liked i thought was a lot of fun and that helped appeal to a brand new audience who Ordinarily, would have had no interest whatsoever in building your wealth, but unfortunately that also came with the dark side of some people, taking it a bit too far. For example, the new york times ran an article about a 32 year old investor, who said he was lured into the app through features that included falling confetti and emoji filled phone notifications. But after repeatedly losing money, he took out sixty thousand dollars from home equity.

To put into even riskier options in hopes of making his money back surprisingly, after having some initial success, he grew that account to over a million dollars before proceeding to lose all of it, and his account is now down to 7 000.. Now, according to an analysis of industry data and legal filings, as well as interviews with past and current robin hood employees, they say the app was built on what appears to be a silicon valley, playbook of behavioral nudges, and push notifications to draw investors towards risky trading Which happens to make robinhood quite a lot of money in the process and the gamification of investing is working in the first three months of 2020, robin hood users traded nine times as many shares as e-trade customers and forty times as many shares as charles schwab, customers. They also bought and sold 88 times as many risky options contracts as schwab's customers relative to the average account size, according to the analysis that they say leads their customers to making decisions not in their own best interest. But in the best interest of robin hood, who benefits from excess trading, others are concerned that robinhood is not doing enough to protect their own customers against the risks of investing, as evidenced by a tragic situation in which 20 year old, alex kearns took his own life.

After thinking, he had lost 730 000 trading, an investment that he should not have been qualified to make, so the sec has a solution and they call it regulation best interests that would warn users before they invest in a volatile stock. They also argue that, because robin hood rewards its users when they place a trade that could be interpreted as the company giving advice and if a company has an influence on which stocks you invest in then technically they should be guiding you towards the stocks that are In your own best interest, the sec then ended their statement by saying that they'll continue to monitor the meme stock frenzy in light of the ongoing volatility in certain stocks to determine if there have been any disruptions, the market, manipulative trading or other misconduct. Now, obviously, though, this has not stopped meme stock communities and wall street bets from finding beaten down stocks, buying them up and making a lot of money, but even though there tends to be a predictable pattern in terms of which stocks are bought up, it doesn't always Appear to be true, for example, this week wendy's was the go-to fast food stock that was serving a lot more than just chicken tendies, but they don't fit the mold of the traditional meme stock in the sense that they're heavily shorted and low-hanging fruit. In fact, it was just a few days ago that a reddit user said they were actually legitimately undervalued, and then we have the catalyst.

Only six percent or 13 million shares are available for retail trading, meaning if this thing were to go viral. A low scarcity of shares, combined with low volume combined with high interest, means a little buying push could move the price very quickly, very high and well that's kind of what happened at the time. I was planning this video windy shares were about 28, a share and as for where it could go from here, it's really too early to tell, but they are, however, very active on twitter, where one user asks if their new salad has superhero powers to which they Respond, i legally cannot say that, but it is super good now. Obviously this was enticing to see if they would respond to me too.

So i took to twitter and tagged them in a post, saying if you could remind my viewers to smash the like button, i will immediately go ahead and buy your salad and guess what they didn't respond. So it's definitely not as bullish as i would have expected and maybe that's why their stock is down today but hey. You know what i tried anyway, the way i see it when it comes to meme stock, investing, listen, i get it. I see the appeal it's hard not to look at strangers on the internet, making hundreds of thousands of dollars in a few days and thinking hey.

You know i should be able to do that too, but at their core meme stocks make very little fundamental sense in terms of the company itself, they're extremely risky and just as easily as you can make money, you could lose money. The losers, unfortunately, are the ones we rarely hear about during a meem stock frenzy. It's easy to feel compelled to buy in at whatever price it's trading out, with the hope that maybe you would be able to sell it for more in the future and walk away with a profit. But that does not always happen and usually it's the people who could least afford to lose money who wind up losing money, for example, had you bought a few of these stocks yesterday before the market closed at the time, i was planning this video.

Here's how you would be doing today, gamestop up four and a half percent amc down eight point: six: five percent clover, health down eleven point: four percent and wendy's down eleven point: four percent. I think stories like this would be way more common if people felt comfortable talking about it, but there's often a shame associated with losing money and not too many people want to admit that they impulsively bought in and then sold at a loss. Don't invest what you can't afford to lose set a limit in terms of where you're going to be taking profits, diversify into other investments and understand the risks. With what you're doing i understand it's really easy to think that, oh, i only have ten thousand dollars.

It's going to take too long to hit a million, so i may as well just go and yolo everything i have, because that's my only chance, but then we really just got ta call it for what it is and that's gambling and you should at least make An effort to have an entry and exit point ahead of time, so you don't get caught up in the emotion of having this stock rise and fall in a matter of days, and i think it's pretty obvious that meme stock investing is here to stay and even, If they put warning labels on certain stocks, i don't think that's going to dissuade anybody who's convinced they want to buy it. I think, what's most likely going to happen from this, is that fundamentally it's going to discourage short sellers from overly shorting a stock hedge funds? Might also quickly de-risk as soon as they catch any wind of the memestock rally and over time, there's probably going to be a more balanced price discovery of stocks instead of finding the one that's most shorted and then driving it up from there. But enough about meme stocks, let's go back to robin hood and uh i'll. Tell you the reason: i'm canceling them.

First of all, it's important to mention that, as somebody who talks non-stop about personal finance, it's my job to use every single stock market brokerage out there. I trade with everything i see which features i like and which features i don't like, and many of these accounts have been set up for years, but unfortunately, robinhood has been the one lately giving me a lot of problems now in the past. It's not bothered me that they route order flow, pretty much every single brokerage does it and it was never an issue. I also was not affected by them temporarily, shutting down meme stock, investing during the gamestop saga and for the most part, i've just had money sitting on that account for quite some time that i've just let grow.

But since then a few things have happened on april 15th, i got a notice that my account had been restricted and that i would be unable to withdraw money from the platform. You know, i thought fine, it doesn't really matter to me much anyway. I wasn't planning on moving money around so i'll, just get that sorted and leave it be, but then immediately after i also got hit with a deposit restriction, which means i can't deposit any more money on the platform which again i thought, okay, fine, it's not that Big of a deal i have plenty of other brokerages out there it'll be fine, but once i got that notice, i went ahead and uploaded my driver's license my passport and my social security card. So that way, they'd be able to verify my identity.

But two weeks went by and nothing happened, so i emailed their support team to follow up and they responded by saying due to the nature of your claim. We are escalating your case to our fraud investigations team, if necessary, a representative from robin hood, will contact you by phone. So then, after that, another two weeks goes by and i hear nothing so i follow up with them again and i get another reply just following up on your case, letting you know that the information you provided is still being investigated. Our team will follow up with you soon now.

Another week goes by and i send a follow-up email and i get back the time to complete. Our investigation varies for each account and situation, but we will keep you updated along the way. It has now been two months, there's still been no progress made, my account is still locked and i have no access to my money. I even gave them the benefit of the doubt by sending them an email last night before even making this video just to see.

If maybe something could get resolved to which again i get this email, i have reached out to our fraud team for an update. As soon as i hear fro, i am them, i will be sure to update you. Thank you for your continued patience now. Had this been a situation where this was my only account and i needed the money for rent or bills, or anything like that, i would have been screwed.

This, unfortunately, is a huge problem and is the reason why i'm planning to remove all of my money from the platform as soon as this restriction is lifted. I usually tend to be pretty easygoing with stuff like this, and i don't even mind if my money is locked up for a few weeks or even a month or two at a time, but now two months and no indication of what's going on at all i've. Just had enough, so that's why i'm canceling it it really sucks. This was just the final straw and keeping this going for two months now is just too much to ignore.

So those are my thoughts on those two topics when it comes to meme stock. Investing just understand the risks associated with what you're doing and make sure you have enough money, diversified elsewhere in the event of a short-term loss. However, it's obvious that meme stocks are here to stay, at least for the foreseeable future, and hedge funds should be very cautious about which stocks they end up shorting, because all it takes is a few of these in a row and then poof, it's all gone, and For robin hood, just open my account customer service is so important and there's no reason why it should take two months to lift the restrictions on my account for what seems to be just a standard identity, verification. I'm just glad.

I have more than one account and i have plenty of other options to turn to in the meantime, but had robinhood been my only account and that's it i would have been royally so with that said, you guys thank you so much for watching. I really appreciate it as always make sure to destroy the like button. Subscribe button and notification bell also feel free to add me on instagram. My posts are pretty much daily, so if you want to be a part of it, there feel free to add me there.

As my second channel, the gram stefan show i post there every single day - i'm not posting here. So if you want to see a brand new video from me every single day, make sure to add yourself to that. And lastly, if you want that completely free stock worth all the way up to now, seventy dollars use the link down below in the description sign up for public with codegram, you may as well get that free stock. It's pretty much like free money and i'm posting all of my own stock trades up there, including the cheesecake factory, which is now up eight and a half percent, since i just posted this like two days ago.

So if you want to be a part of that link down below in the description, get your free stock. Thank you so much for watching and until next time.