Recently, meme investing has been gaining popularity. In this video, I’ll talk about everything you need to know about meme investing. What is it? Should you invest in meme stocks? And how to do so. I’ll share whether I’ll invest in meme stocks or not. Enjoy
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0:00 – Intro
0:36 – What is meme investing
Meme has become a part of the stock market. If you check WallStreetBets, you will see many people sharing their ideas about different stocks. And once in a while, these posts would get enough people interested in the stock. They would invest the money to pump the stock up.
These stocks are being pumped up for a reason. The common thing about these companies is that they aren’t doing so well, eg Gamestop revenue has been declining steadily over the years, same for AMC. Hedge funds saw this and decided to short these stocks.
This caught the attention of WallStreetBets, who decided to pump the stock back up, causing a huge short squeeze. Which then led to many hedge funds to lose a ton of money. Meanwhile, it also saved the companies from dying. Gamestop and AMC took the chance to sell new shares to raise capital..
3:26 – Should you meme invest?
Warren Buffett and Michael Burry advised against investing in meme stocks, while some say its ok to do so. My take is that, if you have disposable income that you don’t mind losing 100%, it is ok do so. That’s because there’s asymmetric risk, limited downside, high upside.
6:10 – How to meme invest?
When investing in meme stocks, you will need to follow a few rules. First, in the short term, the market is a voting machine, know that eventually stocks will follow their fundamental value. That’s why you need to have an exit plan and know when to take profit. Look out for upcoming events, you will want to sell before the event. That’s because of something known as buy the rumor, sell the news. People will take profit after the news comes out.
Some brokers like Interactive Brokers have the trailing stop order function, in which it limits your downside but allows you to have unlimited upside. Check out Dave’s video where he talks about it:
There are some websites which allow you to track stock sentiments:
8:46 – My plan
My goal is to achieve financial independence in 5 to 10 years time. I would rather bet on stocks that have real fundamental value. But if the opportunity comes along, I wouldn’t mind using a very small amount of money to invest in meme stocks.