Jordan Belfort, the 'Wolf of Wall Street', hails small investors buying shares in GameStop but warns 'be careful'

Jordan Belfort, the former stockbroker known as 'The Wolf of Wall Street,' has offered advice to small investors in GameStop.

John Minchillo/ Evan Agostini/ AP

• Jordan Belfort thinks it's "gratifying" to see hedge funds losing billions of dollars.
• But 'The Wolf of Wall Street' told Sky News that he believes GameStop mania will be "short-lived."
• Belfort urged small investors to tread carefully and only invest what they can afford to lose.
• Visit Business Insider's homepage for more stories.

Reddit day traders have recently rebelled against Wall Street short-sellers, dramatically driving up video game retailer GameStop's stock price.

As a result, hedge funds and other Wall Streeters that shorted the retailer have lost billions.

"It's shocking, really amazing, and gratifying to see a little bit of the pain going on the side of the hedge funds," Jordan Belfort told Sky News. "The hedge funds have been beating up little investors since the beginning of time pretty much."

Belfort, played by Leonardo DiCaprio in Marin Scorcese's "The Wolf of Wall Street," told the broadcaster that he wishes he'd come up with this strategy outsmart hedge fund managers.

Read more: The SEC is monitoring the GameStop trading frenzy. Here's why lawyers and former regulators say clamping down on the market will be tough.

But the stockbroker, who was jailed for 22 months for fraud and stock-market manipulation, is also urging small investors to tread carefully. 

"While this will be short-lived… everyone's got to be really careful because it's going to be like catching a falling knife when it unravels," he told Sky News.

"The danger is that Wall Street and hedge funds especially are experts at identifying what we call 'inefficiencies in the market,'" Belfort went on.

"This is an inefficiency in the market right now and they will look to close that inefficiency very quickly," he added.

In his interview with Sky News, Belfort recognized the potentially lucrative appeal for small investors choosing to buy shares in GameStop.

"It's a wonderful opportunity for people to make money - everyone's bored and locked up - but just be careful and make sure whatever you invest in these type of hot stocks, make sure you invest only what you can afford to lose," he told the broadcaster.

"If you happen to make money, pull the original investment out and play with the house's money. That's my advice to everybody," Belfort added.

Read the original article on Business Insider