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MANILA - Traders should be wary of how a lot of retail investors prop up speculative stocks without any basis, a stock analyst said on Monday.

Edmund Lee, president and CEO of Caylum Trading Institute, told ANC's Market Edge that there were "fake moves" in global stock markets recently, as retail investors hyped up small companies without real prospects of growth.

Lee said it is dangerous to trade speculative shares as stocks tend to "always go back to the mean" or their average price, and investors might get trapped when this happens.

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"We think this is a great opportunity [to buy] big and mid caps (large and middle-sized companies), as most of these blue-chip stocks will benefit as the economy recovers," he said.

Blue chips are the top 30 reputable stocks of the largest firms in the country that make up the Philippine Stock Exchange index (PSEi).

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After being hyped by retail investors in January, Gamestop shares further declined to $52.40 from a peak of $483 in end-January.

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Lee noted that equities are the ideal investment for fund growth during the pandemic as "close to zero" interest rates globally provide for unattractive returns for bond investments.

The Bangko Sentral has kept its key rate at 2 percent, after reducing it by 200 basis points last year to shore up the economy amid the disruptions caused by the COVID-19 pandemic.

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