Meme Stocks: A New Way to Invest, or Lose it all in one day?
I must admit that when I first learned about meme stocks and began watching shares like Gamestop: (GME) rise from $19.00 to $483.00 a share I was very skeptical. This was a direct result of a short squeeze resulting in a 1,500 percent increase in GameStop's share price over the course of two weeks of trading. As an active swing trader who trades everyday, this also made me very curious at the same time. I started watching this stock and a few others have huge market fluctuations on a normal day of trading and not be controlled by the averages, news and quarterly results which typically directly affect a stocks value. This is something new to me and many other investors that have developed their own strategies trading from one week to the next, and some jumping on board with this new method. It’s very hard to watch your stock price falling when the NASDAQ Composite is down for the day, and (GME) is heading “To the Moon” or in layman’s terms An option that has no stop point in sight and keeps gaining value.
I started to dig into this phenomenon to find out more after hearing reports on the news that a large group of individual investors decided to start controlling this particular stock option to take down major hedge funds. This group encourages novice and seasoned investors to have “Diamond Hands”, calling them “Apes” and “Retards” to hold with tips off the popular Reddit website section Wallstreetbets,. This has also been tried with other stocks like AMC Entertainment Holdings (AMC) with not the same amount of success as (GME) as of todays date? They encourage people that have bought shares of AMC high, to not have “Paper Hands” and to hold out as most of them have lost considerable amounts of money already as novice investors buying the stock high, and waiting for it to go up like the Gamestop peak back in January.
The movie theater chain AMC has gone into heavy debt like many other companies, including Gamestop that considered filling for Bankruptcy earlier this year and so many others that have had to face the harsh reality of this pandemic, and the draconian lockdown policies putting many Large and Small companies Out of Business for good. So what do these phrases mean?
Diamond Hands / 💎🙌: An investor who holds on to a stock or cryptocurrency regardless of the risks, headwinds, or losses to get to an end goal. Often used to call on a group's collective strength to get through hell or high water.
Paper Hands / A stock trader with paper hands will sell at the first sign of trouble. They are also more likely to sell as soon as their investment turns green or breaks even. This is also known as having “weak hands”.
Stonks / A deliberate misspelling of stocks, as traded in the stock market. It is often used to refer to such stocks, and finance more generally in a humorous or ironic way. Someone making a very bad decision to buy more of a losing stock and especially to comment on the financial losses.
Apes / informal : A large and stupid or rude person. ape. English Language Learners, often disapproving : to copy or imitate something or someone.
Degenerates or Retards / Reddit users referred to themselves as Degenerates or Retards. (an anagram for “traders”). When they posted their analysis of possible trading opportunities, it was known as “DD” or due diligence. These DDs would be very detailed, just like the kind of analysis that the now famous Keith Gill - AKA - DEEPFU**CKINGVALUE.
So for most of you this is perhaps hard to follow since your not an actual trader. In all reality (GME) in my opinion is a “PUMP AND DUMP” Stock. It’s actually a toss up on what it’s going to do in the market from day to day. Is there some strategy towards this? Yes. I have seen it go up $150 or more in one days gain since the big leap, and it has had major fluctuations resulting in $50 or more, up or down in a days market. It’s a huge gamble from day to day as it could do anything. I myself do swing trade in (GME). I have made some very nice gains. I have also lost money a couple times because I forgot to initiate market stops.
From what I have witnessed investing in (AMC) and other meme stock is that when you see it on Reddit, it’s usually to late to buy in because shares are usually peaked at his point and on the way back down at market open from a sell off. Never put all your eggs in one basket, and keep a diverse portfolio. There are big gains to be made off (GME), but you have to know how to time the market, and sometimes you may be better off buying a lottery ticket. T
