Social Media, Meme Stocks, and Debt -  Investing and Debt Advice

By 1st Lt. Spencer C. Wolfe, Fort Bliss Legal Assistance Office

In January of this year, a unique force – a social media community, rocked the stock market. Through the use of “retail investment” apps that allow for quick depositing of money to invest in stocks, thousands of users invested in specific stocks of video game retailers, movie theaters, home and bathroom design retailers and other meme stocks.

A “meme stock” is a trading security that sees a dramatic change in trading volume after going viral on social media. Quickly, these stocks jumped in value, highlighted by one video game retail stores jump from a $20 average price to a high of $483, a spike of more than 2,000%. In tracking the social media community page devoted to talking about Wall Street stocks, the recognized source of the meme stock push, many users were able to profit greatly from the push. Unfortunately, the community also shows a large number of people who decided to invest at the peak price, only to watch the stock price dramatically fall back to the $40 range.

This quickly changing series of events demonstrates the dangers of investing in the stock market without preparation or financial advisement. While it is possible to have invested in these stocks and profited, the financial harms other users shared brings a ripe opportunity to discuss what to do if you unfortunately lost big investing in any of these meme stocks. It is worth noting that roughly 50% of the social media community’s users fall within the 18-24 age demographic, ages consistent with many young enlisted Soldiers and officers. Given the desire of many for get rich quick schemes, it is safe to assume that some Soldiers have been negatively impacted by the meme stock craze.

First, the basic rule of investing in the stock market is never to invest what you are not willing to lose. While there can be calculated risks, and ways to diversify risk out of your portfolio, the truth is that investing in the stock market is very similar to gambling. There are educated rules and practices to both gambling and investing, but there is no way to know the outcome beforehand. That is why the best practice is to limit stock market investing to money that you are certain you can do without, and to utilize the assistance of stock market professionals when possible.

Secondly, if you find yourself in the position that you invested too much money, and are now financially struggling, the best thing to do is be proactive about your debts. Steps to take to be proactive can include:

·         Contacting Financial Readiness Program personnel through the Army Community Service (contact information for the ACS office is included at the end of this article); b

·         Budgeting to acknowledge what expenses and debts you are able to pay for and which ones you cannot;

·         And, reaching out to loan companies, leasing offices, or your bank to notify them of your financial situation.

Many times, companies that you owe money will be willing to provide extensions, waive late fees, or offer payment plans when you notify them ahead of time. It is when you fail to pay without notice that your situation can get more complicated.

Finally, if you find yourself in the position that your debt has overwhelmed you, and is now in the hands of debt-collectors, you need to know your rights and protections under federal law. Many times, there are ways to work with debt collectors to pay off your debt without being harassed. If you find yourself being harassed by debt-collectors, or feel your rights are being violated, reach out to the Fort Bliss Legal Assistance Office to make an appointment to speak with a lawyer who can advise you of your rights and how to address debt-collectors appropriately. If your rights have been violated, either through harassing phone calls at unusual times or places, or false, deceptive, or misleading conduct, or unfair or unconscionable means of collection, the attorney can assist you in filing a complaint with the Consumer Financial Protection Bureau. The CFPB is a U.S. government agency that makes sure banks, lenders, and other financial companies treat you fairly.

Ultimately, investing in the stock market can be fun, exciting, and profitable. It can also be scary and financially devastating. The key is to know when to have diamond hands (hold on to the stock and wait for it to climb) and when to have paper hands (realize your small losses or gains, and get out before you lose it all).

As part of Army Community Services, the Financial Readiness Program offers FREE education, counseling and support services to assist members of the military community, which includes Active Duty, Retirees, Survivors, and Family members, and Department of the Army Civilians, with their financial affairs, including living within their means and investing for the future. FREE childcare vouchers are provided for those attending classes or one-on-one counseling sessions when children are enrolled in hourly care. Children must be registered with Child and Youth Services. To enroll your child, visit the Parent Central Services webpage for required documents and call (915) 568-4374 for an appointment. Check out FRP on Facebook.

The Fort Bliss Legal Assistance Office is located at Building 113 Pershing Road, and can be reached at (915) 568-7141 or usarmy.bliss.hqda-otjag.mesg.bliss-legal-assistance-office@mail.mil.