Pattie Lovett-Reid

Chief Financial Commentator, CTV

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FOMO has taken on a new and dangerous meaning.

Members of the online forum WallStreetBets on Reddit have rallied a large number of individual investors to swarm the market targeting heavily shorted stocks in a co-ordinated effort that’s turned into a frenzy. 

This has gone beyond water cooler chats. It has cost hedge funds significant losses and raised difficult questions about the role of capital markets.

There appears to be excitement around the belief the little guy can take on the big guys and win.

The frenzy has grabbed the attention of regulators on both sides of the border, including the Investment Industry Regulatory Organization of Canada, which "is concerned about the impact the increased volatility may be having on some investors," a spokesperson told BNN Bloomberg, going on to say investors need to be "careful where they get their investing information" and cautioning against “betting the farm.”

My fear is that traders are now simply jumping on board to trade with a vengeance, throwing caution to the wind, and doing very little research. 

Fear of missing out is becoming a very dangerous game.

The mob reaction in the market seems to be another sign of bubbles forming. And it is very hard for me to think the fundamentals of a company won't win in the end. 

Traders beware. Amateur investors are at record numbers , trading app downloads are soaring, and while some know what they are doing, many are surely taking risks that are beyond their means.  

I don't know how this will end but if you are worried about bubbles or even want to lock in gains - sell. This is not the time to believe your predictive power because no one really knows when this party will come to a crashing end.