The new movie “Dumb Money” is about the GameStop craze in 2021 when amateur traders banded together on the social media site Reddit to give professional investors a run for their money. In 2021, retail investors bet big on so-called “meme stocks,” with the goal of making money and upending power dynamics on Wall Street. Roundhill Investments came out with a meme stock-focused ETF in December of 2021 under the ticker symbol ‘MEME’. MEME features an equal-weighted portfolio of 25 stocks based on social media popularity and market sentiment. The top 25 such firms are included in the portfolio, which is re-examined and rebalanced twice a month.
The incredible surge of GME stock last year, which took its shares from around $4 in mid-2020 to more than $480 per share in January 2021, was one of the most incredible near-term short squeezes I’ve ever seen. For those who choose to invest in meme stocks, its a valid question to ask. While sentiment is part of the equation, its not the only consideration.
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Meme stocks gained attention as a symbol of retail investors’ collective power, leading to discussions about market dynamics, transparency, and the ethical implications of social media’s influence on stock manias, panics, and crashes prices. Collectively, their independent actions have been shown to initiate short squeezes in heavily shorted names. As a result, meme stocks can become overvalued relative to fundamental technical analysis. Then in early June, investors became fascinated with AMC as the movie theater chain — which warned of a potential bankruptcy less than a year ago — saw its stock nearly double in just one day.
You can find your newly purchased meme stock in your portfolio alongside the rest of your stocks, bonds, options, crypto, ETFs, and Treasuries. While it can be tempting to get in on a meme stock craze, your money is safer invested in other ways like through index funds. Once your account is open and funded, you can also choose from a number of different index funds, like an S&P 500 fund, a fund that tracks government bonds or a fund that tracks international stocks.
- Even GameStop can’t be the next GameStop stock with just a 16.95% short interest repeating what happened at the dawn of the meme stock bubble.
- Below are the five best-performing stocks in the Solactive Roundhill Meme Stock Index, ordered by one-year returns.
- The YouTube persona Roaring Kitty posted a future viral video laying out the case for why shares of brick-and-mortar video game retailer GameStop Corp. (GME) could soar from $5 to $50 per share in August 2020.
- For example, when retail investors on platforms like Reddit identify heavily shorted stocks, they may coordinate buying efforts to drive the price up, triggering a short squeeze.
What Are Meme Stocks, and Are They Real Investments?
And, on Monday at least, people are willing to pay much higher prices for shares of GameStop. Meme stocks lure investors with the promise of potentially big returns in little time. Bear in mind that meme stocks can be especially How to buy ethereum on metamask volatile, so plan accordingly and be prepared to continue investing more over time.
Where the ‘meme stock’ phenomenon stands, 2 and a half years after the GameStop craze
Meme stocks became all the rage among retail investors during the COVID-19 pandemic. Meme stocks are created when a company’s shares catch fire with individual investors on social media platforms such as Reddit and quickly skyrocket in price. But, as many traditional investors and analysts point out, these viral stocks can be very risky since they rely on high interest from small investors to sustain the stock prices’ liftoff “to the moon.” In summary, people base their investment decisions on various factors, including what they believe the future value of a company will be.
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But this compensation does ADSS forex broker not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. Several “meme” stocks, including GameStop and AMC Entertainment, raced higher in a reprise of the social-media driven frenzy of three years ago. SoFi’s financial services — all unified together via a singular app — got its start in the student loan niche of the industry. But since becoming a public company, the fintech stock favorite has gotten aggressive, expanding its reach and has added a few million new customers in recent years.
However, critics argue that their price performance and appeal have little to do with their fundamentals and much to do with their entertainment value as speculative playthings, much like casino games. Meme stocks exhibit several defining characteristics that differentiate them from traditional stocks, shaping the dynamics of their trading and investor sentiment. Bond Accounts are not recommendations of individual bonds or default allocations. The bonds in the Bond Account have not been selected based on your needs or risk profile. The bonds in your Bond Account will not be rebalanced and allocations will not be updated, except for Corporate Actions.
Charles Schwab has funds that are straightforward options with no investment minimum. Expense ratios can be as low as 0.02%, meaning every $10,000 invested costs $2 annually. Click the link below and we’ll send you MarketBeat’s list of seven best retirement stocks and why they should be in your portfolio.
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