If you look at it from a bigger perspective, everything is a trend. Even the Roman Empire was a trend too, but just like...a really long one that wanted to control everything from Mesopotamia to Spain. You can Google that later.
Meme stocks though, are we ever going to grow tired of them? After being introduced to us under the guise of "overthrowing the short-sellers" back in January, this trend has endured a lot of pain and choppy waters in the market ever since but nevertheless seems to still be alive.
What’s the idea?
A collective belief in something can bring it to life, and meme stocks, just like money, are a result of a belief. Frank Durgin is responsible for formalizing this notion by way of what he called the “Tinkerbell Effect” which serves to describe things that exist because, well, people believe that they do.
Where there’s a will, there’s a way, and that couldn’t be more true than with meme stocks. Qualitatively speaking, there have been at least 6-10 different stocks that could be classified as “meme stocks” that have gone viral, and likely many more that were scouted out to a lesser degree.
Five of these stocks have combined for returns of 70x from their valley to their peak in 2021 alone, with two of them clocking returns over 20x on their own ($GME, $AMC). While this is nothing unheard of for the derivatives or OTC markets by any means, it’s unprecedented and abnormal for your regular Nasdaq companies that are questionable in value at best.
So are they here to stay?
In short, probably, but it may not be $GME to the moon all the time. Meme stocks have created a new kind of subculture within finance that was relegated to lurking in the corners of the room before, whereas now they’re front and center.
This is a new, unorthodox strategy that will have varying degrees of returns, both positive and negative. Nevertheless, with the great migration of retail traders into the world of investing over this last year, meme stocks are probably here to stay... in some form or another.