QBITS
What Is a Meme Stock?
A meme stock is a stock that can fit almost any other classification: growth, value, industrial, small-cap, large-cap, or anything in between. These are stocks that spike in price and volume rapidly with little regard to the underlying firm’s fundamentals or value.
🤔 Understanding meme stocks
A meme stock is a stock that can fit almost any other classification: growth, value, industrial, small-cap, large-cap, or anything in between. These are stocks that spike in price and volume rapidly with little regard to the underlying firm’s fundamentals or value.
Meme stocks rose in popularity due to conversations and movements that originate in online forums such as Reddit’s WallStreetBets, various Twitter accounts (including Elon Musk’s own profile), and on TikTok. But because their prices are artificially bloated, they tend to crash soon after they soar, leaving thousands of (primarily retail) investors holding the bag.
What this means for you
If you want to make your fortune in meme stocks, our advice is simple: don’t.
As a rule, it’s unwise to let FOMO dictate your investment strategy, no matter how lucrative meme stock trading may seem. There’s no way to estimate which stock will propel investors’ portfolios to unprecedented heights. And by the time the average person climbs on, it’s likely reached the “FOMO phase.”
But if you want to invest in meme stocks, there are a few steps you can take to, hopefully, minimize your risks:
- Understand that buying into low-quality, high-priced stocks come with a risk of losing your capital.
- Do your due diligence and choose the right company. Focus on stocks with competent, creative management teams that know how to exploit the hype, which may increase the underlying value of their business.
- Get in early – and get out when the stock starts to drop. (In other words, prepare an exit strategy and then stick to it.)
Additionally, it’s important to recognize that most successful meme stock investors are professionals, high-net worth individuals, or traders who buy on margin at exponentially increased risk. And while a few of them do make their fortune in the stock market, they are the exception – not the rule.
If you really want to see success in your investments, taking the long approach with a well-diversified portfolio is, statistically, a better path to success.
Related Qbits
Learn everything about Q.ai Investment Kits and how they help build wealth
Types of Stocks
There are various types of stocks in which to invest. Not all of them offer your portfolio the same.
What Are Stock Futures?
Stock futures are derivative financial contracts that require the buyer to buy and the seller to sell at a set date and price.
What Are Semiconductors?
In the scientific world, semiconductors are materials that conduct current – partly (hence the name). They play a major role in tech for investors.
Level up your investment game
In just 2 minutes, iQ will help you become the expert your friends go to for investing advice.
Q.ai is the trade name of Quantalytics Holdings, LLC Quantalytics. Quantalytics offers automated financial advice tools through Quantalytics Investment Advisors, LLC (“QAI”), a SEC registered investment advisor. QIA’s Investment advisory services will be available only to residents of the United States. Disclosures concerning QIA’s investment advisory services are available on its Form ADV filed with the SEC. The parent company of ForbesMedia LLC, Forbes Global Media Holdings Inc. ("Forbes") has a material ownership interest in Quantalytics. Forbes does not give representation nor warranty with respect to the accuracy or completeness of the content on this website. The content on this website is for informational purposes only and does not constitute a comprehensive description of Q.ai`s investment advisory services. By using this website, you understand the information being presented is provided for informational purposes only and agree to our Terms of Use and Privacy Policy. QAI relies on information from various sources believed to be reliable, including clients and third parties, but cannot guarantee the accuracy and completeness of that information. Nothing in this communication should be construed as an offer, recommendation, or solicitation to buy or sell any security. No representation or warranty can be given with respect to the accuracy or completeness of the information, and is subject to updating, revision, and amendment. Additionally, QAI or its affiliates do not provide tax advice and investors are encouraged to consult with their personal tax advisors. All investing involves risk, including the possible loss of money you invest. Past performance doesn’t guarantee future performance. © 2023 Quantalytics Holdings, LLC. All Rights Reserved.
Copyright © 2023 Q.AI LLC. All rights reserved
We use cookies to provide you with the best experience and show you relevant advertising. Learn more.