A warning on the dangers of investment hype will run at the start of each screening of Dumb Money, a film that opens today around Australia on the GameStop “short squeeze” incident of 2021.
The Australian Securities and Investments Commission is running the cinema advertising campaign, which Calissa Aldridge, ASIC’s executive director of markets, says is a unique opportunity to get a message directly to the target market.
ASIC’s Calissa Aldridge says its new campaign is aimed at those most susceptible to investment hype. Credit: Natalie Boog
US-listed GameStop’s share price rose by about 2000 per cent in January 2021, before losing most of these gains in early February. Short selling is a highly risky trading strategy in which traders make money when share prices fall, rather than rise.
The publicity surrounding the rise of GameStop’s share price, and the small army of mostly young investors, influenced by social media, who started trading during the pandemic, led to a spate of market manipulations among smaller listed Australian companies in the latter part of 2021.
Aldridge says films such as The Big Short, Margin Call and Dumb Money can glamourise risky investing, and it is important to remember that with high-risk investments, you should be prepared to lose all your money.
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“It can glamourise what is essentially really risky investing – they make for great stories, but our key message [is to be careful as] quite often when investors get involved in the hype … they can buy when prices are high and the prices come down, and they lose out,” she says.
The cinema advertising coincides with the regulator’s new consumer campaign called “Don’t get burnt by hype”.
As well as raising investor awareness of the risks, the campaign sends a warning to those who seek to employ a strategy called “pump and dump”, which can be illegal.
The instigators of the market manipulation create an air of excitement about a listed company or simply make a company a target, hoping that other investors will join in and drive the share price higher.
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They then sell – or “dump” – their shares and take profits, leaving other shareholders holding shares worth less than they paid for them.
Crypto scams and apps that seek to “gamify” share trading are also on ASIC’s priority list, as well as its crackdown on influencers, those who give stock tips and other “advice” online but lack the necessary qualifications.
Aldridge says a survey of young people in 2021 commissioned by the regulator showed one in three aged 18 to 21 said they followed “finfluencers” and two-thirds of those said they had changed their investment behaviour in response to what was said.
Not only was there a huge influx of younger investors during the pandemic, but they are hugely influenced by what they hear online, she says.
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