He has also urged them to be careful
Jordan Belfort, the original Wolf of Wall Street, has praised the army of small investors who have pumped money into GameStop stock in order to sink hedge funds.
The movement began on Reddit and quickly became global news as the world of finance tried to reckon with the idea that they could lose billions from what appeared to be a guaranteed bet.
Belfort has said it’s been ‘gratifying’ to see the little guys win, but has urged them to take caution with their investments, warning that it will eventually unravel.
“It’s shocking, really amazing, and gratifying to see a little bit of the pain going on the side of the hedge funds,” Jordan Belfort told Sky News.
“The hedge funds have been beating up little investors since the beginning of time pretty much.”
“While this will be short-lived… everyone’s got to be really careful because it’s going to be like catching a falling knife when it unravels,” he added.
“The danger is that Wall Street and hedge funds especially are experts at identifying what we call ‘inefficiencies in the market’.
“This is an inefficiency in the market right now and they will look to close that inefficiency very quickly,” he said.
"If you create a world where work doesn't work, and wild gambling seems to make you money, ordinary people are gonna want a piece too."
Former trader and inequality economist @garyseconomics explains how Reddit beat Wall Street on GameStop, but warns it's not all good news pic.twitter.com/wEMKZOORfK
— PoliticsJOE (@PoliticsJOE_UK) January 29, 2021
Belfort, who spent 22 months in jail after admitting fraud over stock market manipulation in 1999, told Sky he wished he had thought of the idea himself. But also emphasised the need for small investors not to get carried away.
“This is 1999 all over again and that’s why I’m begging everyone to please be careful here,” he said.
“When the average person gets in, that’s the time it’s going to actually crash.
“You never know when that moment’s going to come. It’s going to come, of course, because things will eventually see their fundamental value.
“It’s a wonderful opportunity for people to make money — everyone’s bored and locked up — but just be careful and make sure whatever you invest in these type of hot stocks, make sure you invest only what you can afford to lose,” he told the broadcaster.
“If you happen to make money, pull the original investment out and play with the house’s money. That’s my advice to everybody,” Belfort added.
