Past the fun and excitement of YOLO investing lies the harsh reality that only a meager portion of quick in-&-out investors rake in millions on the strategy.
Such inexperience in true market dynamics is the reason why the strategy is extremely risky, as most investors in one-off stocks hyped by message boards have never seen a bearish market, nor have they any clue of what a market crash looks like.Ĭonsidering that, and the fact that many of them are investing borrowed funds, their life savings, or even their mom-&-pops’ money, is painting out an eerie picture of the potential consequences of what a sudden market crash or shakeup could result in. And rightly so, considering the young age of most investors in YOLO stocks. Youth is oftentimes described as a disease of inexperience. Such a rush results in massive artificial demand fueled by message board posts, pushing prices up. In turn, the short-sellers have to start covering their positions by buying back the shares that they had previously borrowed and sold. In fact, stocks with considerable short interest attract droves of buyers. Needless to say, a legend was born that took on a life of its own and spread like wildfire, feeding on the hype frenzy and the trusting nature of YOLO stock investors. And though there is no actual asset class that could be termed YOLO, it pertains to companies that have posted immense gains and generated headlines during the pandemic lockdown period. With over 80% of investors in YOLO stocks being born in the late 1990s, their overconfidence in continued market growth is staggering, allowing them to take on leverage in the form of credits and debts to start investing in selected stocks. This bizarre phenomenon has seen stocks being pumped beyond even the most optimistic prices by online message boards in an almost coordinated tidal wave that swept across the booming market through 20.
But it has recently overspilled into the conventional financial industry of Wall Street, taking on the form of the YOLO movement. The meme phenomenon has spread far and wide beyond the obscure dark and not-so-dark humor online boards into the financial market, with crypto meme coin tickers taking up the precious characters of Tweets posted by some prominent investors like Elon Musk. The adherents of the YOLO movement are a young bunch of diehard optimists believing in a single stock and its future performance, pitching in all the chips they have, while hoping for the best.
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