October 22nd, 2023

The gamble

Meme stocks! Which will be the next one?

This concept became well-known in the beginning of 2021 with the shorting and ridiculous price manipulation of GameStop. After that there have been a few others, with the most noteworthy ones being perhaps AMC and Bed Bath & Beyond. These have seen huge volatility in their price, plus huge problems in their lines of business as companies. Recently, Bed Bath & Beyond filed for bankruptcy, too.

Needless to say, these companies and stocks do not paint a very good picture of what investing in the stock market is about, nor what investing is about for most people. It is a form gambling and entertainment. Whether there is something wrong about those two is up to personal preference. I personally did take part in the hype and came out with minuscule profits. Had I held on to the stocks for a while longer, the profits would have been rather significant. The emotions I went through back then were obviously colorful, but the most vivid one was definitely excitement.

In fact, even nowadays, even though I have steered clear from these so-called meme stocks, I find following them and the discussions concerning them interesting and exciting.

At a casino, the games have been designed so that the house wins in the long term. Sure, occasionally someone will beat the odds and win big, but in the end, there will be other players, and the house will end up on the winning side over the course of time. That is why there is a zero at a game of roulette. Thus, gambling in the long run is not profitable, unless you are able to manipulate the odds somehow – in which case it is no longer gambling, but just cheating. It would be interesting to know if meme stocks have had a better expectation of profit for the ones investing in them than for an average gambler in a casino. I don't think there is a very reliable statistic of this information to be found, though.

My guess is that the most who invest in them end up losing, with a few odd big winners here and there – much like in a casino. Not that there is a anything wrong with it, though. It is bread and circuses for everyone out there.