9/8/2023 0 Comments Bloomberg wallstreetbets lingo“If you are new to investing, and you see something like GameStop, it gives you a completely skewed view of what investing is about,” he says. He is also concerned that WSB has changed people’s perceptions of typical stock market behavior. Jones describes these returns as “dreadful” and points out that traders would be better off if they had instead spent their money on an ETF that tracked the index. It gives us hope that we can all make money,” he says.Ĭ’s data lays bare the riskiness of meme stock trading, showing that investment in 105 WSB stocks generated positive returns in only 50% of cases after three days, while just 34% of these gave positive returns after three months. “But the people who make it big are the ones that we point to because they provide an example of somebody who escaped and made it good. He believes this risk will continue to result in many people losing their money. “The ethos of WSB has always been right in line with what it took to get rich in our country, which is that it takes a risk,” he says. The heightened risk of meme stocks and CFDs undoubtedly deters some investors, but the former financial adviser says the element of danger is part of the appeal, and that for many, there is “no honor” in being a long-term investor.įor Haupt, WSB is less about a measured approach to risk and more about appealing to those interested in the glamor and thrill of trading. You’re buying short-term contracts that expire within a week, so either the contract expires in the money, or it expires out of the money.” “I balk at even calling it investment,” says Haupt. Michael Haupt, who moderated WSB from 2019 to 2020, says the subreddit targets traders with a short-term mindset.ĬFDs (contracts for differences) are often used to invest in meme stocks. This timing is a key part of meme stock trading, which relies on social media chatter to stimulate interest and share price movement. This demonstrates the gamble of WSB most people will lose, even when joining the game quite early on. But when the big winners, AMC and GME, are disregarded, short- and long-term returns are, on average, negative. After this, losses typically worsen, from 0.2% the next day to –2.2% seven days afterwards. On average, buying the stock one day after the hype will give the highest day-trading return of 0.9%. Meme stock trading favors those who buy into these companies early data shows that investing in a stock the same day it becomes popular on WSB is statistically the best time to invest in it. “The research we have done is interesting and shows that unless you are in really early, on day one when it starts moving, you are likely to lose money on meme stocks.” “People think, ‘GameStop moved 1,000% in January, so it’ll do that again,’ but clearly it hasn’t,” Jones says. Although the GameStop story came and went months ago, people want to hang on to the possibility it may happen again, he argues. David Jones, Chief Market Strategist at, is not surprised by this sustained interest and says the appeal of meme stocks like GameStop is hard to ignore for newcomers to financial markets.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |