Joe Moglia, former CEO of TD Ameritrade, an online trading platform, issued a harsh warning on Thursday about trying to use leverage to increase returns on meme stocks.
“My biggest concern is what’s happening to retail investors,” Moglia told CNBC that he was using the money he borrowed to do more than he had. .. “Squawk Box” So AMC Entertainment Stock prices soared in early trading and fell about 30% shortly after their release on Wall Street.
AMC almost doubled in the previous session, with year-to-date profits of over 2,800% as of Wednesday’s closing price.
Another Reddit favorite, blackberriesAfter closing almost 32% in the previous session, it surged about 17% on Thursday. Bed Bath & BeyondAlso caught up in meme stock enthusiasts, it soared 62% on Wednesday and then fell 22%.
“They need to be able to understand what it really means when using leverage. It’s great to leverage in the middle. Leverage in the middle cuts through the weapon. It’s possible, “added Moglia, who is currently chairman of the Capital Wealth Advisor.
Thursday’s AMC wild swing began after the cinema chain I applied for sale 11.55 million shares “as needed”. As a disclosure, AMC said, “We warn you not to invest in Class A common stock unless you are prepared to risk losing all or a significant portion of your investment.”
AMC said in a securities filing on Tuesday that it had raised $ 230.5 million in a sale of shares to a recessionary debt agency, Madrick Capital Management. Reportedly sold Those new AMC stocks will be profitable immediately.
With the rapid movement of Meem’s stock prices and corporate business headlines, brokerage firms, especially those for individual investors, are asking customers about what appears to be an easy way to make money and the risk of when to sell it. You need to do a better job of educating. Said Moglia.
“For example, if you buy AMC for $ 10 and get $ 20, isn’t that enough profit? If you get $ 30, $ 40, when do you start reducing that position, or virtually that position? “We have to do a better job with day traders,” he added.
Disclosure: $ 22 billion Charles Schwab-TD Ameritrade merger completed in October 2020
Former TD Ameritrade CEO Joe Moglia warns meme stock traders about leverage
Source link Former TD Ameritrade CEO Joe Moglia warns meme stock traders about leverage