It’s not Gambling Mom! It’s Called Leverage, Ever Heard of it?

Every way the new wave of traders is losing money

Image for post
Source: CareerBuilder advertisement.

As a teenager captured by the drunk actions of traders on WallStreetBets, it’s no mystery where everyone’s last dollar is headed today.

Record unemployment, businesses going bankrupt, America teetering on collapse, battling a global pandemic. It’s no big deal — the stock market is at an all-time high. There is just one problem with all of this, however: You have no money.

Get hold of mom or dad’s bank account and creep your way into a Robinhood account. It’s time to make yourself a millionaire! Let’s fall into oblivion, one bad example at a time.

If someone said it, it has to be due diligence.

Look at this guy, for example.

Every day, there is some new news. It’s not just the person above, it’s every single person on that forum.

It won’t matter whether it’s true or false, you follow it. Sure, you’ll probably lose all your money because the person writing it is a teenager who just opened his Robinhood account last week, but that’s okay.

Here’s some more of that sweet due diligence I am talking about:

Image for post
Image for post
Source: Redditor claiming that volatility would come back mid-way into July and everything else should be dumped.

Yes, this person above was wrong. That doesn’t matter, though, because he sounded right. In this day and age, that’s all that matters. That, and upvotes. And this guy had a lot of both, especially upvotes. He told people to buy calls on the VIX at 60 for 7/7 and 7/21. The VIX was trading at 25, and it continued to trend down until 21 today.

Image for post
VIX chart since the beginning of 2020. Source: Chart courtesy of stockcharts.com.

You would have definitely lost your money. All those upvotes are pretty cool, though. Everyone knows if someone claims something on the internet, it has to be true. This is especially true if there are over a million degenerates posting meaningless data points on a daily basis.

Stonks only go up.

Image for post
Source: CareerBuilder.com advertisement

Why would you ever bet against stonks? You wouldn’t, because you would be stupid to do such a thing. Ever heard of capitalism? It’s about infinite growth, pal.

That infinite growth pattern will grow my portfolio sky-high. And that’s for free. No need to explain me the mathematics of a zero-sum game — I’m not interested in your jargon. Go and feed that non-sense to the intelligent investors. It’s all about pumping those numbers up!

Leverage is free money.

You hear that, mom? Leverage basically means I’m going to make more with the same money I have right now. The more leverage, the more money. What could go wrong?

Nothing, because if you have taken to heart that stocks only go up, you’ll be fine. Stop thinking about the negative, nothing bad ever happens on the stock market. They invented options trading in the first place, and it was to make people rich. Otherwise, why would there be all these posts about people getting insanely wealthy in such a short period of time?

This person traded 460x his portfolio size and didn’t even know it. He ended up making $110,000 by accident. If he can do it, anybody can.

Obviously, this is the year where nothing wrong can happen — even if everything is going bad and nothing makes sense (and the numbers don’t support it).

Written by

UC Berkeley, mathematics. Los Angeles. Long-time runner. Top writer on Quora, 100M+ total content views. New to Medium. Inquiries: Moumj@berkeley.edu

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store