- Robinhood-user Richard Dobatse said he turned $15,000 into $1 million, and then lost everything.
- He told the New York Times: “They make it so easy for people that don’t know anything about stocks. Then you go there and you start to lose money.”
- He said he is planning to appeal his case to financial regulators for arbitration.
- Dobatse’s story is a cautionary tale about the dangers of day-trading, and how quickly losses can mount.
- Visit Business Insider’s homepage for more stories.
One of the most painful examples of the perils of the day-trading boom has emerged, after an amateur trader turned $15,000 into $1 million, then lost it all, the New York Times reported this week.
31-year old Richard Dobatse told the New York Times he initially funded his account by taking out $15,000 credit and two $30,000 home-equity loans to fund early losses.
He turned those loans and credit into about $1 million, he told the Times. But within months he lost almost everything with only $6,956 left in his account this week.
Dobatse told the New York Times: “They make it so easy for people that don’t know anything about stocks. Then you go there and you start to lose money.”
He said he is planning to appeal his case to financial regulators for arbitration.
Online trading platform Robinhood has taken the investment world by storm in recent months, evidenced by a surge in account openings. More than 3 million new accounts have been created this year with many mom-and-pop traders turning to the stock market to make quick money when markets tanked in March.
Dave Portnoy, founder of Barstool sports, turned investor has become the poster-child of day-trading in recent months with his aggressive “Davey Day Global Videos,” often boasting unprecedented bullishness and posting videos touting many gains.
While Portnoy told Business Insider last month that he plans to return to sports once activity resumes and effectively leave day-trading, gambling experts told Business Insider that they think many sports gamblers may remain invested in stock markets.
Read more: A Wall Street expert sees a retail-investing trend that preceded the dot-com bubble and financial crisis bubbling up again — and warns it will end ‘abruptly and painfully’ for the stock market
Markets have been divided whether to applaud Robinhood traders for timing the market effectively, or to blame them from falsely inflating stock prices and taking risks beyond their means.
Billionaire investor Leon Cooperman said last month: “They are just doing stupid things, and in my opinion, this will end in tears.”
However, not all amateur traders seem to have lost their money.
A Reddit user on the site’s “WallStreetBets” forum with username mori226, claimed on Wednesday they turned $35,000 into $1.25 million during the throes of the pandemic
“I cracked the 7-figure mark, and then some,” the trader said in a post published on Wednesday. The claims have not been verified.
Read more: Wall Street is being shaken to its core by a legion of Gen Z day traders. From a casual hobbyist to a 20-year-old running a 14,000-person platform, meet the new generation of retail investors.