_meme stock investing

1. What is meme stock investing Even if you don’t care about stocks, you must have heard of the buzzword “meme stocks”. Do you wonder why these stocks have become so popular? How are they different from other stocks? We will explain in this article how mem stock investing operate and how they perform in comparison to FAANG stocks. “FAANG” is the acronym that represents the stocks of the five top U.S. technology companies: Facebook, Amazon, Apple, Netflix, and Google, a subsidiary of Alphabet. These stocks represent 15% of the S&P 500 and their performance has a substantial effect on the overall market. Now, let’s come back and try to understand the mania around meme stocks.

2. A meme is an image, video, text, typically funny and amusing in nature, that goes viral among internet users, often with slight variations. The term meme was not originated online. It was published in “The Selfish Gene”, a book authored by Richard Dawkins, where he used meme to describe an idea or behavior that spreads across people in a culture. The virality of meme stocks happens in a similar fashion and hence the name. Meme stocks’ prices increase solely due to social media interest and not based on any fundamental value. Social media platforms like Reddit, Stocktwits, and Twitter, contributed massively to such artificial escalation. This meme stock frenzy is particularly driven by young investors with a high appetite for risk, gaming, and social interactions. The combination of the right psychographics in the right social settings has fueled the unreasonable hike in prices in a short period of time, naturally, followed by an inevitable fall.

3. Meme stocks follow a community-driven approach to investing but how does their life cycle work: · Early Adopter Phase: A handful of investors observe a particular stock is deeply short sold and begin to buy it in bulk. The stock’s price slowly begins to climb, which is certainly the ideal time to get in. · Middle Phase: Other people notice meme stock investing the increase in volume and more individuals start buying. As a result, the stock price skyrockets. At this point of time, there is a risk involved but you can still be a part of the frenzy. · Late/FOMO Phase: Online conversations about the stock spread across the internet. At this point in time, fear of missing out, commonly referred to as FOMO takes hold, and more investors join in. · Profit-Taking Phase: Early adopters begin cashing out. People start fearing to lose money and sell too. Hence, the price goes down. Also read this article how to make money from home as a woman