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It happened again. Meme stocks like Gamsetop (GME) and AMC Entertainment (AMC) had a round trip again, leaving countless retail investors in the dust.

The apparent culprit behind the boom-bust in these names was an anonymous poster named “Roaring Kitty.” Whether or not this individual was responsible for the rip (and subsequent rug-pull) in these stocks is up for debate. But in my most recent TheoTrade evening newsletter, I warned traders to stay away from these stocks.

Listen, I’ve been around in this business long enough to see a disaster coming before it happens. It doesn’t take a crystal ball to realize that a stock that rips more than 100% in a single day is bound to give back a fair amount of the rally. The only way to last in markets in the long run is to have a set of timeless principles, and these three are some of my favorites….

Three Ways to Protect Your Stake for the Long-Term

1). Never speculate with more than you can afford to lose. Trading and investing are not the same thing. Time in the market matters more than timing the market, but timing the market is how you generate alpha and outperform the benchmark.

2). Cut your losses short, and let your winners run. In my time here at TheoTrade, I have countless examples of this playing out in real time. One trade I still have on includes Applovin Corp. (APP). I bought it back in January, I’m up over 80% on it, and I’ve scaled out ⅔ of my initial position.

3). If it seems too good to be true, it probably is, and, absolutely, the faster they rise, the harder they fall. I don’t care whether it’s meme stocks, crypto-related trades, or pot stocks. In reality, once the crowd finally takes note of a move, 80% of it is already done.

To proceed otherwise is to be caught holding the bag for someone else. Of course, these aren’t the only principles I operate under, but I want to keep it short and simple for you. I started off in this business on the inside and at a young age. I became a stockbroker at the ripe age of 20 - before I had even graduated from university.

This gave me some excellent access to information at a very early stage in my career, but after several years in the industry, I realized I would be able to help individuals more by educating them - instead of clipping fees from their portfolios. 

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