I Lost Over $3,000 By Following Bad Investment Advice On YouTube

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  • After inheriting some money, I turned to personal finance YouTube to learn more about investing.
  • There was so much hype surrounding stocks like Tesla and the Coinbase IPO that I felt I had to jump in.
  • But since then I’ve lost over $3,000 and realized I should watch YouTube just for entertainment.

In 2021, I finally made the decision to become a financially responsible adult by investing and saving for my future. I’m a big fan of learning from people who know more about different topics than I do, so I turned to personal finance YouTubers.

A lot of YouTubers I looked up to are millionaires, so I assumed they knew what they were talking about. Unfortunately, this ended up costing me thousands of dollars.

I was attracted by the belief that these people were experts

When I decided to start investing, I was sitting on thousands of dollars of an inheritance and didn’t know which stocks to buy. I turned to YouTube for some advice as I know the platform well. Although I’m not so active anymore, I developed my own YouTube channel to over 80,000 subscribers. YouTube is a great learning platform, and many experts share their wisdom through educational content.

At the start of 2021, Tesla stock had recently hit all-time highs at around $880 per share, and a family member made a lot of money with that stock. I decided to start there and equip myself with more information on this stock and see if others thought it was a good idea.

If you type anything related to Tesla stock on YouTube, you’re inundated with content. There are personal finance YouTubers who spend most of their time discussing this specific stock. Browsing through these channels, I came across a YouTuber who talked about more than Tesla stocks and caught my eye.

Not only did this YouTuber make multiple videos every day, but he also did live streams for the market open and close. He is worth millions, and even pays for the Bloomberg terminal, or $2,000 per month. With the amount of content this person created, he was my favorite.

This YouTuber was friends with other personal finance YouTubers, so I started watching their channels as well to learn more. One of these YouTubers covered crypto, which I was really interested in learning more about.

On average, I probably watched five to six hours of personal finance YouTube each day. The YouTube algorithm is designed to recommend similar content, so I had plenty of YouTubers to watch out for who covered both crypto and traditional stocks.

My ignorance of the stock market was my undoing

I was addicted to the fact that these people were much richer than me, so I assumed they knew what they were talking about. At that time, I knew nothing about financial statements and quarterly results or what technical analysis and fundamental analysis were.

When you don’t know what these things are, you’re fascinated when these YouTubers show numbers and charts explaining what they mean. Once they tell you they’re certain a stock is undervalued and a great buy, I didn’t question it.

At the time, I didn’t realize that if the stock market was so easy to understand, we would have a lot more billionaires. I didn’t realize it’s a well known fact that you can’t predict the market. I also didn’t realize that too many people buy a stock after it peaks, which is a really bad idea.

All of these YouTubers were promoting Tesla stock because it seemed obvious since it was at an all-time high. Because of their promotion of Tesla stocks, they also strongly recommended me to buy ETFs from Cathy Wood, like the ARK Innovation ETF. Wood was considered a genius for having so much Tesla stock, so it was easy to believe what these YouTubers were saying.

The Coinbase IPO is what woke me up to what was going on

Coinbase went public on April 14, 2021. I had heard it was never a good idea to buy an IPO, but the hype on YouTube was amazing. A YouTuber I watched was making non-stop Coinbase IPO videos for about a week before the launch. He explained how he had spent hours and hours going through Coinbase’s financial statements and was absolutely certain that the stock was worth around $700 per share. So anything less than that was stealing on IPO day.

That day, I remember telling myself several times that I would not buy Coinbase stock. But when the market opened, shares started at $381, which was far less than the YouTuber expected. I still haven’t purchased.

The price shot up to $429.54, and I remember thinking how I could have made easy money if I had bought when the market opened.

When the price fell back below $400, I was watching the YouTuber’s stream, and he decided to buy, and was talking about what a steal it was. I still haven’t purchased.

Eventually it fell to $333 per share, and I thought I’d be a fool if I didn’t buy. I bought three shares, and I was lose money since.

Over the next few weeks and months, I watched this stock fall further and further. I realized that if this YouTuber was spending so much time analyzing this company and he was wrong, he clearly had no idea what he was talking about. Then I realized that none of them had. I started going through their previous content and tracking how often they were right, and the percentage was extremely low.

Of course, professional money managers are wrong too — again, it’s impossible to predict the market. But the energy and fanaticism around certain stocks on YouTube, most often fueled by investment enthusiasts rather than financial advisers, caused me to make a costly mistake, and I’m sure others have does the same, with much more money at stake.

So far between the Tesla, Coinbase, and ARK ETFs, I’m over $3,300 at a loss. I learned the costly lesson that these YouTube personal finance “experts” should only be watched for entertainment purposes, and that was about it. I can’t help but think that others probably lost a lot more by making the same mistake as me.

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