Over the past two months, I’ve tried my hand at meme-stock trading and got many unexpected lessons along the way.
I went into this experiment knowing full well that I was engaging in something slightly out of my control. I bought two stocks— Cleveland-Cliffs (ticker: CLF) and SmileDirectClub (SDC)—that were popular on WallStreetBets, the Reddit forum at the center of the meme stock frenzy. I even bought a call option on Bed Bath & Beyond (BBBY).
A reminder: Any profits I make from those trades will be donated to the nonprofit Dow Jones News Fund.
I was surprised by how emotionally tied to my trades I became, especially on days when my portfolio saw wild swings. Frankly, there were times I was tempted to add money to my portfolio to offset some of the losses I experienced. That reactionary instinct is the exact opposite kind of behavior Barron’s teaches.
Another lesson: My experiences in Reddit forums and on Robinhood’s app made me realize the surge of retail trading seen this past year is real and lasting. Does that mean that we’ll frequently see wild trading days where shares of meme-stock favorite GameStop (GME) soared triple digits? Maybe not, but volatile times are very possible as emboldened crops of retail traders hope to cash in on the next big stock.
Just this week, GameStop and AMC Entertainment (AMC) saw shares take a roller-coaster ride. Both stocks tumbled Monday. For GameStop, traders were dismayed by widening losses in the company’s third quarter, while AMC shares came under pressure due to insider selling. But retail buyers returned in earnest Tuesday. Not all of Monday’s losses were recouped, but there were more eager buyers than sellers according to a tally compiled by Fidelity.
Meme trading is proving to be more durable than many expected. Early names are still popular and it’s possible that new favorites will appear next year.
As for me, my meme trading experiment is over for the moment. I’ll still be bringing you new videos on my YouTube channel. But when it comes to trading, I’m cashing in my chips.
Want to see where I ended up? Watch the video above to find out.
Write to Carleton English at carleton.english@dowjones.com
"Trading" - Google News
December 17, 2021 at 10:55PM
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Barron's Delved Into the World of Meme-Stock Trading. Here's What We Learned. - Barron's
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