Investing in 2021: avoid volatile stocks

(NBC News) Instead of using the market to make money, some investors have recently used the market to make a statement.

Rogue day traders teamed up to inflate the value of GameStop and other fledgling stocks that major hedge funds were betting against.  Their success drew in lots of first-time investors hoping to make a quick buck.

According to Investopedia’s Caleb Silver, it also hurt faith in the system.

“The mania around day trading and some of these very hotly traded stocks also left a bad taste in the mouth of a lot of our readers,” Silver says.  “Almost 50%, 45% say they trust the stock market less today than they did six months ago.”

Silver has a word of advice to small investors: Stay away from volatile stocks.

“Day trading, especially very hotly traded stocks that have a lot of volume and volatility, is a great way to lose a lot of money,” he warns.

Instead of trying to make a quick buck on the latest “hot” stock, Silver suggests a different path.

“If you stick to your plan, investing for the long term usually pays out,” he says.  “The tortoise always beats the hare when it comes to long-term investing.”

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