From Day Trading to ETF Investing: Kevin O'Leary Following The R/WallStreetBets Crowd
About a week ago Kevin O'Leary posted on his Twitter that he had downloaded the Robinhood investment app, loaded several thousand to it, that he was also on reddit and following r/wallstreetbets, effectively joining the herd for the ride as he put it.
“The bottom line is, we’ve got millions of new players in the market, and that’s always better,” - O’Leary to CNBC
There are many new young people getting involved in trading and it is apps like Robinhood that have made it much easier for the average person to take part. Kevin compares day trading to gambling though he says he doesn't think there is anything wrong with it.
"I suggest to anybody that’s doing that [day trading], take 10% of any position that makes you money and set it aside for your long-term retirement in a different account that buys an index of funds or an index of stocks in an ETF,” - O'Leary
O'Leary has previously criticized Bitcion for being a 'nothing-burger' and says investing in cryptocurrencies like Bitcoin is akin to gambling, but he does reportedly own some of his own stashed in a Coinbase wallet.
“I was lecturing at Harvard Business School, and the students challenged me to be an investor in crypto. And I said, ‘You know what? I have no problem with that. In fact, I’ll risk a hundred dollars.’ - O'Leary
He reportedly purchased a few different coins including litecoin, bitcoin, XRP, XLM, ether, and bitcoin cash.
He only purchased about $16 of each coin though and says that one reason he doesn't love crypto is because you have to guess which coin is going to move, not all of them are the same. The one he has had the most luck with seems to have been bitcoin.
It is too speculative a ride for O'Leary it seems,
“Should I respect it? Yes, I’m not against it. But would I put a lot of capital into it? No, I don’t want to own something that goes up and down 30% in a day or a week,” -O'Leary.
As far as the GameStop frenzy, O'Leary has been one to sort of cheer on the situation, saying that retail traders are likely to be getting interested in the stock market for the long term now because of it. Also, that hedge funds might seek to reduce shorting stocks now because of it.
O'Leary on GameStop:
“They’re learning about the risks of the market. ... We forgot to educate them in high school, so let them learn in the real world, which is even better,... I think this is fantastic what’s going on. Leave it alone. It’s a great thing that’s happening here.” - O’Leary
He isn't one trying to jump on the bandwagon and start to vilify Robinhood just yet either.
"I know everybody's trying to vilify the Robinhood platform, but I'm not,... I think Robinhood is a brand here to stay and the envy of every money center bank and every wirehouse and every online broker. No one has ever gotten 16 million accounts this quickly. In a couple of years, you're going to see Robinhood as a major player competing against them in a way that no one thought was possible.” - O’Leary to Yahoo Finance
He says the key might be to turn them into long term investors
“...we've got 16 million accounts that are learning something about the market,... The real opportunity for Robinhood is to actually take some portion of these day traders and turn them into long-term investors by maybe taking 10% of their winnings and indexing it for the long run and starting to save for themselves down the road.” - O'Leary
Those investors affiliated with r/WallStreetBets he says shouldn't be underestimated.
So it's no wonder he would seek to join and follow the herd.
“I think what we learned is that the assumption that the Reddit crowd and the Robinhood crowd were idiots and didn't know what they were doing and were stupid is incorrect,... Read those blogs. These are smart people. And they actually organized together and went after these shorts and caused major pain…. now who's the new sophisticated investor?” - O'Leary.