Meme Stocks A Smart Investment or Risky Bet

1. Meme Stocks: A Smart Investment or Risky Bet? Social media has entered into a lot of work sectors. A lot of content is consumed over social media first & then checked on the television, or elsewhere to reconfirm. We get informed about global events in just one click. Afresh social media trends about diverse topics & sectors keep coming. One of the trends that started a few years ago is the stock market term ‘meme stock’.Technology & market infrastructures have evolved substantially, and the actions of humans in the stock market have too. The meme stocks have caused a commotion. Views of the current generation & veterans in the stock market field differ at times. Each one has own views based on their knowledge & experience. The professionals or veterans of the finance sector are opinionated about the meme stocks being nothing but a fad, whereas the youth say it is profitable. Albeit, no one can proclaim it to the core.

2. We will also look at some slang developed by this particular stock community in between. Slang: Paper hands- A belittling term for investors who sell meme stocks in fear of future losses. It depicts skepticism over the community. Meaning of Meme Stocks Meme stocks are the shares of a company that is in the limelight due to an upsurge in investor mood. This surge in groupthink which starts over the internet, especially on social media platforms, formulates an influential reach for those particular stocks. The internet ethos has made these stocks the talk of the town for the past few years. Conceptually speaking, such a concept is crafted due to the meme culture that prevails to a huge extent currently. Slang: Diamond hands- A badge of honor to signify steadfastness & resilience despite losses suffered. In simple words, these stocks are those whose share price is hugely influenced by the internet’s viewpoint on that particular stock’s performance, via memes. It can cause extreme profits or severe losses depending on the type of memes being circulated over the internet. Hard to believe but it’s true. It is a normally traded stock by the general public whose cost price is heavily dependent on the activities being hyped about on social media. Here’s What Finance Experts Say The famous GameStop video game company episode is not unknown to people now. The CEO of the company posted a picture of a McDonald’s ice cream cone with a frog emoji that resulted in the stock astonishingly increasing to a whopping 104% in a single day. Barring aside the technicalities of the stock market, meme stocks are exponentially volatile. The rising & falling values of the meme stocks have nothing to do with the actual estimated value of a stock. Here are some blunt but honest opinions of financial experts:

3. Investing isn’t entertainment:Due to the sudden upsurge of social media in every sector lately, it has created a lot of fuss about meme stocks. It surely provides informational content, no two ways about it, but the whole investing process in the stock market is perceived as a source of entertainment, is what experts say. Investments in this manner lead to irrational thinking & wrong investor behavior. Slang: ATH- “All Time High” refers to a stock’s peak price. Celebrating ATH is a moment of pride and delight in the community. Being in the race: Investing in these stocks works on herd mentality. Today’s meme stocks community wants easy & fast money, without fundamental analysis. Considering market volatility in such an investing pattern becomes utterly vital. A desire for swift asset growth is intensely high in them. According to a study, the loss of $1 feels like $4 to these types of investors. Not only the meme stock investors but social retail investors are also in line. A Contrary Viewpoint to Finance Experts The meme community & social investors have a contrary belief & understanding about investing. According to research experts, the stock market has opened doors for a fresh generation of investors facing financial struggles differing from the previous generations. These differences will be crucial to the understanding of market movements & investor behavior in the future. Investment Strategies Scrutinizing fundamentals: Even if a meme stock, analyzing a company’s business operations & its performance in the market is imperative. Keeping a check on the company’s financial performance & price of the stock signals the harmony of the company in aspects of performance. If the price seems unrealistic, there may be a catch that can create obstacles at times. There is news at times about companies that heighten the stock price for the time being.

4. Slang: To the Moon- Being hopeful that a stock will achieve substantial gains. It depicts enthusiasm & expectations for the invested money. Set boundaries: If an investor still wants to invest, constant & concurrent monitoring is necessary. Determine the standards of take-profit & stop-limit orders to avoid losses, if profits persist it should be calculative. Set boundaries for investing & strictly do not get carried away even if you enjoy profits the first time. A well-crafted strategy to manage risks & protect profits works wonders & saves you from heavy losses. Keep a pragmatic aim: Be principled about your entry & exit strategies. Be aware of you’re the risk-bearing capacity you possess, as you plan to invest in these stocks. Be both, patient & aware: These stocks can drop drastically or surge up incessantly resulting in a bit of a greed to keep investing. Still, be diligent in monitoring & avoid making hasty decisions. Characteristics: 1. Instability: Prices can soar up or descend astonishingly, maybe on the same day too. 2. Great digital presence: Have high reach & engagement on social media & internet. 3. No connection with the basics: The price of the stock & the company’s performance may highly mismatch. 4. Covering frenzy potential: Many stocks have a higher short interest that can lead to dramatic price increases. 5. Dark horse story: A lot of stocks are perceived as underdogs battling against Wall Street. Pros & Cons Pros An opportunity for very high returns in a short period. Opportunity to secure a stake in a new investment venture before it's known in the market.

5. The social media generation has prime investing opportunities ahead, as a lot of new avenues keep opening up. These stocks can be a prolonging component in the share market. Slang: Stonks- A jargon for meme stocks, made popular by the internet. It highlights the playful & irreverent attitude of the community towards traditional finance. Cons Sometimes meme stocks do not function on the fundamentals of an organization, it can cause a backlash, having to face losses. The demand supply curve in this case is unpredictable and can cause losses. There are no predictions of whether or not this trend will stay in the long term. The pump-and-dump scheme is a threat to investors as the prices are artificially inflated & sold off at a profit, but it doesn’t happen with everyone. The luck factor matters too in this situation. Identifying a Good Meme Stock Long-term investments are often for years, not for days or a couple of weeks. Here are some points to consider: 1. Surveying the company with its fundamentals with stable growth, healthy profit margins, & a solid balance sheet. 2. No one can predict when a normal stock can become a meme stock. If it reaches that stage, an individual has to be patient enough to listen to the company management’s comments on how are they handling its afresh state. 3. Craft a plan on the risk management factors as to how the situation will be resolved if things don’t go as planned. Conclusion Meme stocks are the new trend in the stock market wherein one can enjoy profits or suffer losses. Social media, finance, & pop culture are an interesting intersection for investing enthusiasts. It also has its challenges & advantages. Even if you want to invest in

6. these stocks or not, it is crucial to grasp this phenomenon in the current financial sphere. Uncover the latest trends and insights with our articles on Visionary Vogues