The rise of the online discount brokers
2020 brought Covid and with it boredom. Many people who did not know anything about stock market were suddenly drawn to it one way or another.
Many discount stock brokers in India saw huge growth in their subscribers.
And looks like now they have enough funds to even buy ads for TV. They have flooded the IPL ads.
This is going to bring a lot of people on board who have no idea what they are doing and that is dangerous. Some people will quickly lose some money, get burnt and then will stay away from trading stocks.
But some others will get profits and this will boost up their confidence like a castle in the sky with no foundation. This in turn will make them to take riskier positions and bets and they will lose a lot if the market turns south suddenly.
Many giant investors are sounding the alarm that the current markets are grossly overpriced. If they prove to be right, the market will crash back down. These people who have no idea what they are doing will be harmed most by the crash. These new investors and traders will pump more money in pushing the market even higher.
This clearly is a positive feedback loop feeding itself, until one day it doesn’t. That day, there will be blood.
