Deeper dive into meme stock trading:
Meme trading is becoming something new as retailers in larger markets continue to make headlines. The ability to combine your research or collective sentiment lends credence to a new investment strategy, causing a commotion that brokers, hedge funds, and institutions don’t expect to get. As more stocks are added to the category every day, volatility also affects rebalancing decisions in market indices such as the Russell 2000 (NYSE ARCA: IWM), which prior to stocks was seen as a stable benchmark for mutual funds.
• The old favorites list for AMC NYSE: AMC, BlackBerry (NYSE: BB), and GameStop (NYSE: GME) has been changed. Recent sessions have given us huge ups and downs in names like Clover Health (NASDAQ: CLOV), ContextLogic (NASDAQ: WISH), Clean Energy Fuels (NASDAQ: CLNE), GEO Group (NYSE: GEO), and even Wendy’s (NASDAQ): WEN). )) saw). The fast-food chain was added to the group yesterday, which is a notable departure from the classic meme form with a brief interest in stock printing.
• Background: Meme trading started in January with GameStop and was a one-piece strategy (short tap), one-piece (remember binary options?) And a middle finger strategy for Wall Street (the guy for packages). The strategy was the result of YOLO trading, which became popular on the WallStreetBets forum for providing financial freedom overnight. Retailers concentrate all their savings in one go, without worrying about risk management or diversification. The method has been exacerbated by a swarm of trading waves, as well as the gamification of equity programs and access to commission-free trading.
• Remember the Hertz (OTCPK: HTZGQ) bankruptcy last summer and the wave of violence in Kodak (NYSE: KODK) that followed? What about Tesla (NASDAQ: TSLA), which, despite a fraction of its revenue, is worth more than any automaker in the world? Do we dare to mention Bitcoin (BTC-USD), Dogecoin (DOGE-USD), or other cryptocurrencies?
• Drill Down: If meme trading is the new casino, timing is everything until the last dealer has the wallet. Some still rely on techniques that have created countless day trading channels and messaging platforms. Others are quick to point out the luck that comes online but doesn’t forget the huge losses that get far less attention. This is surprising even in the largest public markets, where every share is worth as much as people are willing to pay for it. Will equity principles still apply as meme trading expands into new sectors and industries?