A Word of Warning on the Reddit-Fueled Pumps


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It looks like Reddit’s r/WallStreetBets is at it again.

  • GameStop (GME) is up about 80% in pre-market to $165.
  • AMC Entertainment (AMC) is up about 20% to $10.90.
  • Koss Corporation (KOSS) is up 88%, or $16.39 a share.

While it’s exciting to watch these stocks take off, we again urge caution.   

It may not pay to follow. 

Remember, what goes up this high, this fast will eventually come down just as hard. Don’t get caught holding the bag when the short covering spree comes to an end.  That’s what we said prior to the pullback in most of the Reddit-fueled stocks.   

In fact, since our note in late January:


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  • GameStop fell from a high of $483 to $40 – a loss of 92%
  • AMC Entertainment fell from a high of $17.25 to $5.51 – a loss of 68%
  • Koss Corporation fell from $105.40 to $11.44 for a loss of 89%

 That could eventually happen again.

Yes, it’s a good deal of fun watching these stocks run on a Reddit push.  However, it’s just not safe to follow, in our opinion.  The last thing we want to see is you holding the bag with these stocks, losing money you didn’t need to lose.

If we didn’t care, we wouldn’t say anything.  Stay safe.

 

 

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