A flood of new investors in theory should be an invigorating tonic for the market, but such events typically come with side effects of manias and bubbles. And because the arrival of the new cohort typically coincides with a rising market, often their initial, but incorrect, view is that successful investing is a doddle.
It isn't of course and that's why it’s difficult not to make the comparison with the dotcom boom when the belief that “it’s different this time” held sway, investors chased the hottest tips and FOMO was rife. No wonder the City watchdog is concerned about investor behaviour and gamification influences. Many new and typically younger investors have exposure only to high-risk assets, in particular cryptos. Crypto currencies are here to stay but that doesn’t mean prices will continue to rise. Preventing harm to these new investors has become a priority for the FCA and last week it outlined its plans to stick harder-to-avoid risk warnings in front of people with high- risk investing habits, particularly around cryptos and peer-to-peer.