Next stock-market crash: Expert warns options greed will end badly - Business Insider

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A Wall Street expert sees a retail-investing trend that preceded the dot-com bubble and financial crisis bubbling up again — and warns it will end 'abruptly and painfully' for the stock market

A recent example was the rush to buy shares of companies that the coronavirus crisis pushed into bankruptcy. Stocks likeTchir, the head of macro strategy at Academy Securities, says price has become "just a number" to many. The rigorous yardsticks of what's embedded in the price — things like earnings-growth prospects, competitive advantages, and other value investing tenets — are being thrown out the window.

"I am not sure when it ends, but from experience, when the 'just' a number trading ends, it ends abruptly and painfully," Tchir said in a recentHe expanded on the 'just a number' trend by describing it as the product of investor greed and and innovative investment products. In 2020, Tchir pinpoints the options market, where traders earn the right, but not the obligation, to buy or sell stocks at specific prices and within particular timeframes. These derivatives also have the power to amplify gains — and losses — because they bet on the extent of price swings.Wall Street is being shaken to its core by a legion of Gen Z day-traders. From a casual hobbyist to a 20-year-old running a 14,000-person platform, meet the new generation of retail investors.

 

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