A growing army of amateur investors is bracing themselves for the inevitable downturn in the tech stock market, but so far they're staying put. The young and fearless are piling into shares, defying warnings from seasoned experts that an AI bubble is on the horizon.
Twenty-three-year-old Jacob Foot is a prime example of this phenomenon. He took a chance on US tech stocks back in 2020, using his savings to invest each month in big-name companies like Nvidia, Amazon and Apple. His gamble paid off, with his shares more than doubling over the past five years. But even as he enjoyed the fruits of his labor – he's now set to buy a bigger house in London than he ever thought possible – Foot remains steadfast.
"I wanted a good balance between 'set and forget' stocks like the M7 and a few smaller companies with good upside potential," he says, describing his investment strategy. "It's been quite a risk, but has paid off." When shares slide, as they did last week in response to dire warnings of a major stock market correction, Foot holds firm. He refuses to sell, instead waiting for the upturn or treating the dips as a buying opportunity.
This is not just about the individuals – there are thousands like Foot who are fueling the trend. Retail investors, many of whom got into trading with their parents' money or through low-cost online platforms, are riding high on the wave of enthusiasm around tech stocks. The phenomenon has even given rise to its own culture, with young traders sharing advice and inspiration on social media.
But not everyone is convinced that this can continue indefinitely. Economists and experts warn that a perfect storm of factors could lead to an AI bubble bursting – a situation that would be catastrophic for the industry's biggest players, including Nvidia, Amazon and Microsoft.
The National Bureau of Economic Research has proposed the "inelastic markets hypothesis," which suggests that share prices are being pushed up by investors piling in with cash. This is not just about fundamentals or profitability; it's about the sheer volume of money available to invest. The theory is supported by data showing that stocks like Nvidia, Amazon and Microsoft have surged in value over the past year – far outpacing the wider market.
However, there are also concerns that this phenomenon could be a recipe for disaster. The Bank of England has warned of an "AI bubble," while Olivier Blanchard, a former IMF chief economist, believes that young investors are creating an environment where financial bubbles can grow and become unsustainable.
So how long will this trend continue before the inevitable correction kicks in? One thing is certain – retail investors like Foot will play a major role in determining the outcome. As Chris Beauchamp, chief market analyst at IG, puts it: "The M7 remain hugely popular with individual investors. They are global titans, known everywhere and which generate huge profits."
But for some experts, there's a more sinister undertone to this phenomenon. The "house money effect," where early winners become increasingly reckless, could lead to a loss of discipline among retail investors – a factor that has contributed to past market crashes.
Ultimately, the question on everyone's lips is: how long will the music keep playing? Will these amateur investors be able to defy gravity and stay put, or will they eventually fall victim to their own euphoria? Only time will tell.
Twenty-three-year-old Jacob Foot is a prime example of this phenomenon. He took a chance on US tech stocks back in 2020, using his savings to invest each month in big-name companies like Nvidia, Amazon and Apple. His gamble paid off, with his shares more than doubling over the past five years. But even as he enjoyed the fruits of his labor – he's now set to buy a bigger house in London than he ever thought possible – Foot remains steadfast.
"I wanted a good balance between 'set and forget' stocks like the M7 and a few smaller companies with good upside potential," he says, describing his investment strategy. "It's been quite a risk, but has paid off." When shares slide, as they did last week in response to dire warnings of a major stock market correction, Foot holds firm. He refuses to sell, instead waiting for the upturn or treating the dips as a buying opportunity.
This is not just about the individuals – there are thousands like Foot who are fueling the trend. Retail investors, many of whom got into trading with their parents' money or through low-cost online platforms, are riding high on the wave of enthusiasm around tech stocks. The phenomenon has even given rise to its own culture, with young traders sharing advice and inspiration on social media.
But not everyone is convinced that this can continue indefinitely. Economists and experts warn that a perfect storm of factors could lead to an AI bubble bursting – a situation that would be catastrophic for the industry's biggest players, including Nvidia, Amazon and Microsoft.
The National Bureau of Economic Research has proposed the "inelastic markets hypothesis," which suggests that share prices are being pushed up by investors piling in with cash. This is not just about fundamentals or profitability; it's about the sheer volume of money available to invest. The theory is supported by data showing that stocks like Nvidia, Amazon and Microsoft have surged in value over the past year – far outpacing the wider market.
However, there are also concerns that this phenomenon could be a recipe for disaster. The Bank of England has warned of an "AI bubble," while Olivier Blanchard, a former IMF chief economist, believes that young investors are creating an environment where financial bubbles can grow and become unsustainable.
So how long will this trend continue before the inevitable correction kicks in? One thing is certain – retail investors like Foot will play a major role in determining the outcome. As Chris Beauchamp, chief market analyst at IG, puts it: "The M7 remain hugely popular with individual investors. They are global titans, known everywhere and which generate huge profits."
But for some experts, there's a more sinister undertone to this phenomenon. The "house money effect," where early winners become increasingly reckless, could lead to a loss of discipline among retail investors – a factor that has contributed to past market crashes.
Ultimately, the question on everyone's lips is: how long will the music keep playing? Will these amateur investors be able to defy gravity and stay put, or will they eventually fall victim to their own euphoria? Only time will tell.
so many ppl are investing in tech stocks without even understanding what they're doing lol some people r saying it's like a bubble waiting 2 pop but others r just riding the wave of hype 
and honestly i'm low-key invested myself btw been meaning 2 get into it 4 ages now... anywayz back 2 this trend i think it's wild that retail investors are so influential but also super reckless idk if they'll b able 2 avoid getting burnt 
i mean don't get me wrong i'm all for people taking control of their finances and investing, but this feels so unsustainable 
and its not just him, thousands of others are doing it too... i dunno if thats a good or bad thing tho 
... some ppl warn of an AI bubble bursting but on the other hand, theres this "house money effect" thingy where winners become more reckless 
.
. But are they really making informed decisions or is it just the thrill of investing that's got them hooked? I think its time to start looking at this from a different angle - what does this say about our economy and how we're valuing companies these days?
. Is it really just about "house money effect" or is there something more sinister going on? I think its time for some tough questions and critical thinking, rather than just blindly following the crowd 
.
it's like the 2008 crash all over again 
and this time it could be worse because there's so much money floating around 
isn't it funny how some people are already buying up houses in london while others can barely afford rent 
. They're caught up in the hype and the FOMO (fear of missing out), not doing their due diligence on the companies or the market conditions.
. I mean, economists are warning about an AI bubble bursting – what makes people think they're immune to that? It's just a matter of time before the music stops and everyone's left with a bunch of worthless shares 
.
vs only 20% investing with their own savings 
while Amazon is up 350%. (Chart: Yahoo Finance). But what happens when this bubble bursts? 
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. They need to educate themselves on the risks and the potential downsides before it's too late 
. I mean, what happens when the music stops? Will they be able to recover? It's a tough pill to swallow, but someone's gotta say it 
It's like they're democratizing access to investing, which is awesome. And who knows, maybe these young traders will turn out to be some of the best investors of all time... 
. On the other hand, it might limit their access to those juicy low-cost platforms 
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! all these young investors bracing themselves for a downturn but still putting in their money is insane!! 
has anyone else noticed that social media platforms are creating these super exclusive communities where people can share advice and inspiration with each other? it's like a whole new world of trading has emerged 
like who cares about what experts think?! its all about the young blood and their fearless attitude 
I mean dont get me wrong, ive been keeping an eye on these companies for a while now, and if i had to put my money on it, ill stick with Nvidia and Amazon all day erry day 
. Now everyone can be a "expert" with just a few clicks. I'm not sure if that's a good thing or not...