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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 a?? and warns it will end 'abruptly and painfully' for the stock market

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




Stock prices have become merely numbers for many new traders who ignore the fundamentals embedded in company valuations, according to Peter Tchir, the head of macro strategy at Academy Securities.




He says this disregard for fundamentals is being driven by greed and was evident before the 2000 and 2008 market crashes.




Tchir pinpoints the high options-trading volumes among retail traders as the epicenter of this behavior today.




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Of all the reasons why non-professional traders invest, the most troubling one to Peter Tchir is the purchase of stocks solely because of their low dollar prices.
A recent example was the rush to buy shares of companies that the coronavirus crisis pushed into bankruptcy. Stocks like Hertz were super-popular largely because they were trading for a dollar and some change apiece.
Tchir, the head of macro strategy at Academy Securities, says price has become "just a number" to many retail investors. 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.
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