A Redditor took out $76,000 in loans to trade stocks thanks to Wall Street Bets. He became addicted and lost $6,000 of his girlfriend’s money.

Aaron sold at the height of the stock market, but soon fell into a financial black hole.Reddit; iStock; Rachel Mendelson/Insider

  • A Reddit user took out $76,672 in stock trading loans and lost almost everything.

  • Aaron said he felt addicted to trading after using the subreddit, called or/wallstreetbets.

  • Now he is left with the monthly payment of more than half of his income.

A member of the Reddit group encouraged the Gamestop shopping spree took out $75,000 in loans and said he became addicted to stock trading – even losing the $6,000 his girlfriend loaned him.

Aaron, a software engineer from Munich, took out tens of thousands of dollars in loans to trade goods. He said he was inspired by chatter on the Wall Street Bets subreddit, called or/wallstreetbets and also known as WSB, which pushed him to make investments he couldn’t afford for fear of missing out. big income.

Aaron, 29, is using a pseudonym because he doesn’t want his family to know he’s gone.

“It was like an addiction because you have this community and they’re always posting,” he told Insider.

“Then you see ‘Oh, there’s another big thing,’ and then you’re like, ‘I have to make money and I have to invest or I’m going to miss this great opportunity.’

Although he got $4,000 in the beginning, Aaron soon saw his money falling into a black hole.

He took out five loans for a total of 71,000 euros ($76,672) between December 2020 and September 2021 to help him invest in meme stocks – low-cost stocks that generate interest through social media, increase their value – like Bed Bath & Beyond. His largest single loan was 20,000 euros, or about $21,488.

The Insider confirmed this information in documents shared by Aaron.

He will also buy thousands at a time in companies like Tesla and trading optionswhich allows traders to increase their investment through leverage, giving more than they can afford.

WallStreetBets and trading memes

Aaron is one of the millions of members of Wall Street Bets. The subreddit became popular in 2021 when some traders became millionaires while others went bankrupt, usually through insider trading. “short press.”

Aaron was attracted to the fun atmosphere of the meeting and the cartoons.

WSB traders use this term “teddies” refers to income from the stock market.

Home page image or/wallstreetbets

A screenshot of the r/wallstreetbets homepage.Reddit

“I’ve always been interested in the stock market,” Aaron told Insider. “So I saw the cool avatar, like the awesome profile picture. I was like, ‘Wow, this has got to be my thing.'”

“It wasn’t too serious,” he added. “It was great, it was a fun community and I was like, ‘Yeah, I want to be in this community.'”

Aaron said that the work of WSB is to increase its trade. He reads a discussion about a particular group, asks for a loan for thousands of dollars, and accumulates the money in trading bets. He feels he has been pushed by the growing risk trade – although he admits he hasn’t done much research yet. money has not been deposited.

But last year was a bad year for the stock market. Bed Bath & Beyond, Aaron’s meme stock of choice, has lost 88% of its value since January 2021. It would be better if it wasn’t. another short meeting last week.

‘I was embarrassed’

When the losses from the loans increased, he convinced his girlfriend to let him save her money in August last year.

He first suggested putting 100 euros in a bank account that Aaron could access.

“I said, ‘What am I going to do with 100 euros?’ You can’t make a lot of money out of it. I was like, ‘I’m going to invest your money risk-free,'” he told Insider. He finally convinced his girlfriend to put $10,000 in his account. He revealed that he had misled him on the risk of the investment.

Within two months of receiving his girlfriend’s money, he lost $6,000 betting on meme sales. She found out by looking at her checking account before Aaron could tell her, she said.

“I was embarrassed, and I’m still embarrassed,” he said. “I could go to a casino and play a slot machine and it would be the same thing.”

The Financial Industry Regulatory Authority (FINRA), a regulatory body that oversees the conduct of investors, warns that all investments are risky and suggested using strategies like division and classification of assets can reduce the risk of financing.

“The bottom line is that all investments have some level of risk,” FINRA said on its website. “By better understanding the nature of the risks, and taking steps to manage those risks, you put yourself in a better position to achieve your financial goals.”

Losing the money didn’t end Aaron’s relationship, and he said he even went to Portugal in December with his girlfriend – a trip he paid for. “She really is the dream girl,” Aaron said, adding that he gets angry when the subject of his trade comes up.

But it causes other problems. Aaron said he can only go out for food or drinks if his girlfriend pays for it. He wants to marry her but says he can’t afford an engagement ring.

He estimates that he pays $1,500 in monthly debt payments — a large portion of his monthly income of about $2,800 after taxes, which Insider confirmed in documents. With an estimate of between $50,000 and $60,000 left to pay, he said he will probably pay off his debt by 2028.

“Well, I have to pay the rent, I have to pay for my food, I just have to live to pay for these things,” Aaron said.

In an email to Insider, a spokesperson for Reddit directed Insider to WSB’s rules on the website, which include warnings against market manipulation as well as short-term infections or “scams.”

A Reddit spokesperson said: “Users should interact with the community at their own discretion, following Reddit’s website rules and community rules.”

Aaron told Insider that he had barely gambled before entering the stock market, which he sees as gambling.

“If there were no Wall Street Bets, it would never happen,” he said. He’s not taking it lightly now, but despite his loss, he says he may return to trading at some point.

“I’ll check out the subreddit, and maybe I’ll play with my money again,” he said. He doesn’t know how much, “but I’ll definitely do it because it’s fun.”

Do you have anything to say about using the WSB subreddit with savings? email rhogg@insider.com

Read the original article above Internal Business

Leave a Comment