What Is A “Meme” Stock?
The word “meme” comes from the ancient Greek word “mimema” – meaning imitation – and is used to describe information that is imitated and often spread via pop culture references on social media. Simply put, a meme stock is a shared investing idea imitated by other investors.
How Did the Meme Stock Movement Start?
According to an article in The Motley Fool (see here),
“Keith Gill started sharing his views about GameStop stock on Twitter, YouTube, and the subreddit r/wallstreetbets in 2019, explaining why a combination of high short interest from short sellers (firms that bet against a company) and an undervalued and underappreciated GameStop business could lead to huge gains. Add in a pandemic, a surge in new investors who grew up online, and the ease of stock trading on new apps such as Robinhood Markets (HOOD), and all the right ingredients came together to create a viral meme stock movement.”
What Are the Pros and Cons of Meme Stocks?
Because a surge in buying activity can send a stock price soaring, there are some benefits to owning meme stocks (and potential meme stocks before they rocket higher), namely:
However, as with other highly volatile investments, there are drawbacks to betting on meme stocks because:
What’s the Best Way To Invest In Meme Stocks?
An example of a meme ETF is the VanEck Social Sentiment ETF (BUZZ), an actively managed portfolio of 75 stocks that rank high in social media conversations. (I do not currently own BUZZ.)
Which is the Better Choice? A Meme ETF Or AI ETF?
Conclusion
Hands down, the better investment choice between a meme ETF and an AI ETF is a meme ETF.More By This Author:SoundHound AI: A “Pump & Dump” Stock Or A Long-Term Hold?
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