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What Is a Meme Stock鈥攁nd Should You Buy Them? How it Feels to Trade Reddit's Favorite Plays. - YouTube
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man these guys are nosy all right everyone cover聽聽
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your eyes this is just between聽
me and robin hood right now
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before 2021 if you were looking to invest in a聽
company you might have looked at recent financial聽聽
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statements to evaluate the soundness of the聽
business from there you might have reviewed聽聽
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recent comments from management and analysts to聽
get a sense of the businesses projected sales聽聽
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and profit growth and after all that you'd聽
be left with a decision am i willing to pay聽聽
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x amount today for a stock that could be worth y聽
amount later that approach was flipped on its head聽聽
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in january 2021 by some investors when social聽
media buzz about certain stocks suddenly seem聽聽
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to carry more weight than the company's underlying聽
fundamentals enter the world of meme stock trading聽聽
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i'm carlton english reporter at barrons in our聽
last episode i registered for my own robin hood聽聽
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account now i'm ready to get started but first聽
how should we decide which meme stock to buy聽聽
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some of the earliest meme stocks were聽
heavily shorted names with a nostalgia factor聽聽
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i mean who still has a blackberry when was聽
the last time you set foot in a gamestop聽聽
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and how many times were you able to see聽
a movie in an amc theater during lockdown
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and yet all of these companies saw their stock聽
prices surge in january as though they were聽聽
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experiencing record sales thanks to stock traders聽
touting their names on social media platforms such聽聽
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as reddit individual investors saw opportunity聽
in the fact that there were high levels of short聽聽
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interest in these names that is the big investors聽
betting that the company's stock price would go聽聽
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down gamestop for example had more than a hundred聽
percent of its shares sold short a phenomenon that聽聽
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even baffled wall street industry experts if the聽
meme stock traders could get the price to rise聽聽
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short sellers would be forced to buy聽
back the stock to cover their bets聽聽
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leading to even more gains from there the frenzy聽
grew with more and more traders believing there聽聽
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was money to be made and wanting in of course聽
there's the difference between the money that聽聽
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lives on paper and the money in your bank account聽
and when traders were ready to cash in their gains聽聽
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the meme stocks saw sharp drops in their shares聽
meaning the last traders in were left holding the聽聽
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bag now normally for investing we would recommend聽
that investors do their homework see how a stock聽聽
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fits into your overall portfolio try to get a聽
sense of the company's forward-looking earnings聽聽
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but in this case we're also trying to see some聽
of the meme mania so what we wanted to do was聽聽
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just kind of wing it a bit and see what stocks聽
were trending on sites like wall street bats聽聽
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earlier today smile direct club the maker聽
of aligners for teeth straightening was one聽聽
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of their trending stocks it went public in聽
late 2019 when some of the other major ipos聽聽
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like peloton happened and then also wework didn't聽
happen it was part of that group was volatile for聽聽
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that reason and they also have competition with聽
aligned technologies the maker of invisalign so聽聽
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this one has been one that investors just like to聽
play to see if it will eventually get its footing聽聽
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maybe i'm not getting in super early stock is聽
already up 15 down a little bit after hours but聽聽
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i still want to get in on this one so i am going聽
to buy five shares there's one other stock that聽聽
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i wanted to buy it's called cleveland cliff聽
it's an older mining company struggled a bit聽聽
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in 2016 when a lot of commodities were selling聽
off but we do see infrastructure spending coming聽聽
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so there is some hype around it now today聽
it's sold off a little bit down 3.3 percent聽聽
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but we'll see if maybe i am buying on the聽
dip we're just going to buy five shares聽聽
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all right now this is interesting i'm now making聽
my second stock purchase on robinhood and being聽聽
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prompted to update my profile about my investing聽
goals before i'm allowed to do more trading聽聽
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approximate net worth approximate yearly income oh聽
right wow they are asking the personal questions聽聽
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how long do you plan to invest your money this is聽
a very important question for any investor it's聽聽
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what do you want to do with it are you looking to聽
save money for a house well then you may be less聽聽
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than four years and that will determine investment聽
choices you make four to seven years maybe a聽聽
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saving for your kids college seven or more years聽
again that could be a saving for kids college or聽聽
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retirement how much investment experience do you聽
have as a financial reporter i'm going to be a聽聽
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little high on myself and call myself an expert聽
liquidity needs how important is it for me to be聽聽
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able to get that money out of my account right聽
away i'll be honest it's pretty important to me聽聽
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at this stage of my life even though i don't聽
need the money right away as a comfort level聽聽
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pretty important that i'd be able to get it when聽
i need it let's try to buy some stock now done聽聽
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all right so i now have 116.65 of buying power聽
available that's enough for me for day one i think
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next time we'll check in on how our picks聽
are doing and take a deeper dive into how聽聽
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becoming a meme stock can affect a聽
company's bottom line see you then
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