2 January 2025

Memestocks Won't Make You Rich (Probably)

In the latest video from Richard, the creator behind the insightful YouTube channel "Plane Bagel," he dives deep into the world of meme stocks, particularly focusing on the infamous GameStop saga. If you've been following the financial news, you might recall the frenzy surrounding GameStop in 2021, where retail investors rallied to push the stock price to unprecedented heights. Richard revisits this topic, emphasizing that while investing can be a powerful tool, it’s unlikely to make you rich quickly, especially through meme stocks.

Richard begins by reflecting on his previous discussions about the unrealistic expectations surrounding investing. He notes that the allure of quick riches often leads people to overlook the fundamental principles of sound investing. He references a recent documentary by James Janney, which explores the cult-like following of GameStop and the ongoing belief among some investors that a "mother of all short squeezes" (MOAS) is just around the corner.

The Reality of Meme Stocks

Richard explains that while the initial hype around GameStop was thrilling, the reality is that the stock's short interest has significantly decreased since its peak. Many investors still cling to the idea that hedge funds are secretly shorting the stock, waiting for the right moment to crush it. However, Richard argues that this belief lacks substantial evidence and is more a product of speculation than fact.

He highlights that investing in meme stocks like GameStop can be driven by various motivations, from protest against Wall Street to genuine support for the company. However, he cautions against the narratives that suggest buying and holding these stocks will lead to wealth. Richard points out that many meme stocks have not performed well post-2021, with companies like Bed Bath & Beyond and AMC seeing significant declines.

Key Takeaways

1. Investing Fundamentals: Richard emphasizes the importance of understanding the fundamentals of investing rather than chasing quick profits through speculative stocks.

2. Skepticism Towards MOAS: The idea of a "mother of all short squeezes" is largely speculative and lacks concrete evidence. Investors should be cautious about placing their hopes on such narratives.

3. Long-Term Strategy: Building wealth through investing typically requires a long-term strategy, consistent savings, and realistic expectations about market returns.

4. Beware of Influencers: Richard warns viewers to be cautious of online personalities who promote stocks without disclosing their own interests or the risks involved.

5. Market Realities: The performance of meme stocks often does not reflect the broader market trends, and many have lost significant value since their peaks.

In conclusion, while the excitement of meme stocks can be enticing, Richard's video serves as a reminder that investing is not a guaranteed path to wealth. Instead, it requires careful consideration, a solid understanding of market dynamics, and a focus on long-term growth. If you're looking to invest wisely, it's essential to prioritize sound strategies over the allure of quick riches.

For those interested in a more detailed exploration of Richard's insights, you can check out the full video on his channel, Plane Bagel.