I recall I’d been made redundant and went to interview at another broker based around Imperial Wharf. Downstairs they had their “education” department where people paid large sums to “learn” how to trade, which mostly involved drawing shapes in stock charts and pretending they had meaning (if trading were that easy algo trading would be trivial). Upstairs I got to see the broker they ran, which they funnelled everyone who learnt how to trade into using. Dude interviewing me was coked out of his head, sniffing every 10 seconds. They were, essentially, pretending to teach people to trade while running the trading platform that would take all their money.
They offered me the job. I turned it down.
Online CFD brokerages look to me like the gambling industry wanted to have a section that was branded as "investments" so they could extract that money from uninformed casuals.
I'm not one for banning things, but I really wish there was more financial literacy. Half of the stories in europe of "retail investor loses shirt" are with CFDs when the so called investor likely doesn't even know the difference between a stock and a CFD.
Moreover, because anyone in the financial industry knows this, I assume all companies offering CFDs as their core product, and making their best attempts to make it look like they're selling actual stock, are all ran by a bunch of scammers.
I think your examples and meme stock are two completely different things. MLMs, frauds etc are by design lies while meme stocks are jokes and usually big hive mind mistakes. This is an apples to oranges comparison
When GME hit the fan, I couldn't help but feel how familiar it felt. The cricle was completed when I saw a "if we can drive up the price of GME/AMC with memes, then we can drive up the price of dogecoin -- Buy and HOLD until it reaches $1" appear on near the top of /r/all.
It's not a hivemind mistake. The hivemind seems to create a cycle of individual victims who buy and then once they are invested, they quickly realize how the cycle works and that they need to meme and hype to maintain the price so they can get their investment out.
Sure there are many people who just invest for the meme, but so many fresh people get dragged along who think this is a sure way to make some money.
Then there are also people who have seen it all before and think they can outsmart the mob to make a profit. Many of them do make a profit.
And that's before we even start to consider the people who actively try to stear the hivemind towards new investment (that they have pre-bought)
Their mandate includes insuring that value of shares accurately reflects the value of the company and that investors remain confident in the function of the market. This situation is damaging both those mandates, especially once GME fully crashes and all the noob investors who bought the peek lose their investment and decide to never invest again.
Before anyone replies saying that the SEC should instead be focused on hedge fund market manipulation, I'll point out that's already against the rules and it's just an issue of enforcement.
And I assure you that the SEC are going to have an even harder time enforcing any rules against "meme stock hyping"
But there are differences too of course. The virality built into modern tech makes it easy to amplify opinions into full on bubbles. You don't need to create your of Herbalife to defraud people. Now you just need to find an organic idea / trend that you could profit from ("Buy GME because short squeeze, let's show wall street!"), and hype it up with bots and followers to bootstrap the bubble, hoping that it will snowball on the same kind of virality that put it on your radar in the first place.
The new scheme is better because you don't need to create a company that can be sued. You're just a redditor caught in a meme / joke with thousands of others like you. Some newbies took this too seriously and lost their money. Well duh, their fault, should have been more careful.
Nice and clean, see.
But then, does it matter (for your decisions on participating) whether the source of the hype is purely organic, or if it was helped along by some person? Does it matter how many people helped it along? All those HODL posts, billboards, journalists, etc.
It doesn't really matter if there's an OG evil schemer in there somewhere or if a bunch of people organically / accidentally filled in the role. MLMs perpetuate first and foremost by the actions of regular participants, not the OG schemer, and so do meme stocks. MLMs are / were distributed under the pretense of running your own business and selling products for e.g. skin care. Meme stocks are driven by, well, memes, jokes, politics in this case. It's just a cover story, it doesn't matter.
Up until the crash I've seen zero jokes / memes about selling it all. Every single post I've seen was about holding and buying more. That's not an accident. People who bought into the hype with their money upvote these jokes and not others to bring more people in because they need it to make a profit (or to minimize their loss).
But there were people who legitimately treated this as a joke, right? Of course, just like there were people who legitimately believed in the quality and usefulness of MLM products they sell. Can you tell such people from those who deliberately pump and dump? No. Then, the only role of those people is to add legitimacy to the cover story of the bubble.
My point here is not to blame redditors for this fiasco, it's to hopefully prevent people from jumping into such schemes because they seem organic or funny or whatever. It doesn't matter. The bubble works the same regardless.
Hyping up meme stocks is just the newest addition to tactics like wire fraud, MLMs, etc. It too will in time be thoroughly discredited, yet never eradicated completely.
You can certainly get lucky gambling on crypto, TSLA, etc. You can also trade those profitably by knowing your shit. You will occasionally make poor decisions either way, so make sure you can handle the consequences.