E Should Meme Stocks Be On Your List Of Stocks To Buy?

TM editors' note: This article discusses a penny stock and/or microcap. Such stocks are easily manipulated; do your own careful due diligence.


Wondering what meme stocks are? You're probably not alone. You've likely heard about the term when listening in on CNBC's daily coverage of the stock market. I'll be the first to say that this whole "meme" trend isn't a new thing. But to the average trader or newbie investor in the stock market this year, this might be a "groundbreaking" phenomenon that completely changed how they approach stocks. The thought that a company's stock should reflect its share price has been thrown out the window and we've seen clear examples of this.

GameStock (GME) stock is trading over $200 and even reached highs over $480 earlier in the year. What justified the PPS going up so much besides unbridled hype? What about Koss Corp. (KOSS)? The company didn't change the way people buy or listen to radios so what would make investors buy it all the way up to $127.45 a share? The stock was trading under $1 not that long ago. Or why in the world would any "smart investor" choose to put their money into a bankrupt company like Hertz (HTZGQ) at the risk of losing their entire investment if and when the company emerges from bankruptcy?

These are all great questions and ones that any "normal" investor would ask. I'm sorry to say that the answer isn't as easy to give especially right now. That is if you're looking for a fundamental basis for it. The long and short is that thanks to a newfound gambling mentality that took shape last year - evidently in light of a lack of gambling entirely - new traders flocked to one of the few places still open that they could make money with: the stock market. Furthermore, the gaming mentality of the cryptocurrency market has also added some fuel to the fire.

I can't tell you how many times I've seen people on message boards say they "bet" on a stock going "to the moon." This is usually something we see from new traders looking to buy penny stocks. But this mentality has spilled over into more than just cheap stocks under $5. Evidently GameStop stock, Palantir (PLTR), Peloton (PTON), and even Beyond Meat (BYND) this week have all gotten the lovely Reddit-based boost.

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