June 8, 2021
Over the past year, we have experienced many changes that effect our daily lives. The global pandemic has forced us all to adapt to new trends in our ever-changing world. One of the most profound and unique trends we have seen is the incredible rise of ‘Meme’ stocks and social investing. Investors have banded together through internet forums to not only sustain, but dramatically raise the stock price of individual companies that otherwise, would likely go bankrupt. GameStop and AMC have been two of the companies that have benefitted the most from these social investors, while some large corporate investor have lost billions of dollars as a result. Last week, AMC’s price per share almost doubled without any ground-breaking updates or news from the company. It is unclear the reason behind social investors propping up these companies. Dogecoin, a fairly new form of cryptocurrency based on a meme of a Shiba Inu dog, has also benefitted from this trend. Within the past three months, the price has gone from around 1 cent per share, to a peak of almost 75 cents per share, while the billionaire, Tesla CEO Elon Musk continues to tweet that it will go even higher. With all the information available to us through the internet and the ability to connect with others virtually, it is easier than ever for the social investors to partake in this activity. However, the main question becomes, will it continue? Also last week shares of Bed Bath & Beyond rose 62% in one day as they released new brands ahead of schedule, and retail investors responded in force. It seems as if companies may begin to try and capitalize on this trend and become the next target for social and ‘Meme’ investors. Be wary, however, as we have yet to see what happens if most investors who have boosted these companies up, suddenly decide there is a new trend to move on to. Whether you believe that this type of investing will continue or not, it is important to choose the companies wisely. It can be attractive and potentially lucrative to follow the volatile investing trends, but you must ask yourself; if things go south, am I willing to lose my entire investment? Reach out to us today to get our opinion on the state of the stock market and our picks for the top stock choices moving forward.
Carol Dixon, CFP® & Kevin DeRosa, CRPC®