In an instant:
- Mem stock is the company’s stock that has risen in recent, unusual activity.
- Social media has aroused interest in investing, especially among young investors.
- Vanguard encourages investors to keep stocks in sight in memes.
Baking Talk Bread, TikTok Dance Challenge, Celebrity-Hosted Podcast. Thanks to social media, many new trends have gained popularity during the epidemic. But perhaps the most surprising trend is the rise of meme stocks.
What is a meme stock?
A meme is defined as an idea, behavior, or style that spreads rapidly from one person to another, often through social media. Mem stocks experience a similar increase in viral activity. Users of social media platforms can encourage others to invest in a company’s stock without seeing a price increase, often with little or no consideration of the company’s fundamentals (revenue, profit, etc.). Tensions are quickly building around the company, and when a purchase order for the stock arrives, the stock price rises. However, the share prices of many of these companies soon fall, which may cause some investors to wonder why they invested in the first place.
Mem stocks differ from traditional stocks in the way they perform and 6 Why. The price of a traditional stock is driven by the company’s performance – maybe the company has announced increased profits, a promising new CEO, or the acquisition of another company. In contrast, the price of a meme stock is often driven by the popularity of the stock on social media. Online investors will encourage others to buy stocks and prices have risen long ago. Because of this sudden rise in popularity, meme stock prices often rise and fall much faster than traditional stock prices.
Social Media: New School
Mem stock insanity is a side effect of a larger social change: learning to invest through social media. Social media has become a platform that many young people use to learn new information, and as a result, financial advice has flooded social media channels in the last 2 years. According to a recent survey, 12% of 18-34 year old investors have learned how to invest from social media research, whereas only 3% of 35-64 year old investors and 1% are 65 years of age or older. * Among these young investors Thousands of them make their investment decisions based on the advice they get online and then share this advice with their colleagues. This behavior often leads to popular trends such as meme stocks.
As always, Vanguard encourages you to focus on what you can control: creating clear, appropriate goals; Have a diverse balance of investments to help achieve these goals; Keep costs low; And having a long-term discipline so you can keep up with today’s hot stocks. We have a brokerage platform where you can trade a variety of carefully curated products that are linked to these investment policies for success. We encourage you to use our online resources to learn more and find the right investment for your portfolio.
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* Survey monkeys. CNBC | Momentary poll: “Invest in yourself” August 2021. August 2021.
All investments are subject to risk, including potential loss of the money you have invested.
Diversity does not guarantee gain or protect from loss.