Short-seller Jim Chanos warned that retail investors late in the game could be left holding the bag as more red flags emerged in a speculative stock market.
“The problem with getting more people, retail, involved is that it always seems to happen toward the end of every cycle. Retail wasn’t there at ’09 at the bottom. They weren’t there in ’02 after the dot-com bubble collapsed. They were certainly there at ’99,” Chanos said Tuesday on CNBC’s “Squawk Box.” “So the problem in the last few cycles as I see it is that we get promotors and insiders and people who have done very well cashing out as retail is buying.”
The historic recovery rally from the coronavirus pandemic has attracted a record number of new retail investors to participate in the stock market. Many of them gravitated toward the most volatile and riskiest areas of the market for outsized short-term returns, including shares of companies with struggling businesses like AMC and GameStop.
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