Corporate regulator ASIC launched an advertising campaign to raise awareness of the risk associated with investment hype of the type seen on social media.
This coincides with the Australian release of Dumb Money, a new movie about the GameStop short squeeze in 2021 when retail investors used a Reddit group to pump up a share price.
GameStop’s share price surged by about 2,000% in January 2021, before losing most of these gains in early February.
ASIC believes this type of short squeeze is unlikely to the same extent in Australia because of the regulatory framework controlling exchanges.
The ASIC campaign, which urges retail investors to carefully research online investment opportunities, includes a cinema advertisement that will air nationally from today at screenings of the film.
"Before choosing to invest, people should familiarise themselves with the golden rules of investing and understand the associated risks," says ASIC chief executive officer Warren Day.
"They shouldn’t believe the hype – if an investment sounds too good to be true, it probably is.
"First-time investors should be particularly cautious and aware of the inherent volatility and complexities of market trading. Speculative stocks, by nature, are high risk, high reward, with uncertain prospects. With high-risk investments, you should be prepared to lose all of your money.
"We encourage investors to pause and reflect before investing. Don't get caught up in the hype. Take some time to research investment decisions, go to trusted sources for information, including moneysmart.gov.au."
Retail investors who use social media to ramp stock prices, "pump and dump" shares and engage in market manipulation, may be in breach of Australian financial services laws.
Online crypto scams and apps that seek to gamify share trading are also on ASIC’s priority list.
Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at adnews@yaffa.com.au
Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.