When people think about investment, they have the dream of becoming a millionaire overnight; when in fact most first-time investors will lose money on their first few trades; it’s part of the learning process. So if you’re serious about investing, be ready to lose money before striking gold; see it as the cost of educating yourself in the art of the deal.
When it comes to investing, the biggest hurdle is to deal with the Fear Of Missing Out or FOMO; the only way of you can ever miss out is by not getting into the stonk market. Opportunities come and go; being scared is part of the process; if you weren’t, that would be concerning but remember: fear kills more dreams than failure ever will.
All our lives, we’re being told to put money in our savings account; however, if our savings account’s interest rate is lower than the inflation rate; we’re actually losing purchasing power: a video game in 2010 cost $60; in 2021, a video game cost $90; if you put a $60 in a savings account in 2010 and you don’t have $90 in it right now, you cannot afford to buy what you could a decade ago.
There are very few things more dangerous than someone blindly investing: not knowing how much one is ready to lose or how fees work is a recipe for disaster that will lead to losses. The only thing more treacherous are blind investors who have scored a few successes and believing they know what they’re doing; at every successful trade, they’re increasing their chance of catastrophic loss.
Fees can be confusing but you ought to know how to minimize their impact: let’s say you have $5 transaction fees; if you invest $100 that means you need to get $110 to break even; the stock you invested in needs to rise by at least 10% to start making a profit but if you invest $500, the break-even point is $510; that’s only a 2% rise. With crypto you might have exchange and network fees on top of transaction fees; you need to know what fees apply.
Bill Gates once said: “Success is a lousy teacher. It makes smart people think they can’t lose;” this is a big problem when it comes to investing; once you make a profit, it’s very easy to get in the mindset of reinvesting everything, sooner or later you’re going to end up losing it all; it’s not a healthy mentality; don’t fall in that trap; you win some you lose some; it’s about maximizing the wins and diminishing the losses. And most importantly, if you’ve lost the maximum you were willing, don’t sink more into it.
The best way to avoid gambling mentality and avoid massive stress is to set goals and stick to them. Know how much you’re willing to lose, know how much you want to get out of a trade even before making it, and stick to it. Be realistic in what you project: if you invest $5,000 don’t expect to make a $20,000 profit in a couple of transactions; these kinds of stratospheric rises sometimes happen but they’re very few; if you’re pragmatic your success rate and confidence will allow you to be a better investor.
As much as the meme economy has gone mainstream; it’s still a very insular culture with its own irreverence and ideals; it’s important to understand it, in order to be able to take advantage of the very supportive community of meme stonks retail investors.
If GME has taught one thing to the meme stonk investors is that the establishment, the traditional investing community, and governments will do everything to protect themselves and keep them out of Wall Street; but the strength of retail investors is in their numbers and using their combined brainpower to do what traditional hedge funds have been doing for years: manipulating the market. So try to follow what that community is planning on doing; it might be a rewarding experience.
There are so many things that can be said about DOGE but the most important is that if it is a beloved cryptocurrency because it was created as a joke and doesn’t take itself too seriously; so you should look at it the same way. In many ways, the value of DOGE is based on how its use can increase the entertainment factor: make hedge fund managers lose billions of dollars is fun but transferring these dollars into DOGE made its value jump 600% overnight.
There are a lot of terms to ingest when learning about investing; on top of these, the meme economy has some terms of its own; it’s good to know both like a lot of the terms used by retail investors are related or basis on the hedge funds and wall street lingo.
Paper hands are referring to fickle investors; the kind who sells their shares at the first sign of a decrease in value; this is not what you want to be. On the opposite, diamond hands are talking about investors who are secured in their positions and will hold their stocks to call the bluffs or traditional investors trying to manipulate the market.
This is referring to investments with the potential of exceeding expectations; it’s more than through the roof. It’s all about crossing a milestone that seems unreachable or unrealistic. It’s always used with a grain of salt: everyone knows it will never literally go to the moon.
These two groups are investors are trying to push a stock value one way or another for examples short-sellers are bearish which means they’re betting for stocks to go down as they sell shares they don’t own at a high price and have to buy them at a low price to make a profit. Bulls on the other end are all about the stocks always going up.
Robinhood the app is stealing from the poor to give to the rich. Once a retail investor’s darling, under pressure, they stopped them from trading shares when GME was at its peak and forced auto-sell when it was at its lowest value. A lot of retail investors felt betrayed and will never forgive Robinhood for what happened.
There are many places to get information about investing in the stock market and with this comes a lot of misinformation and dubious advice; the best way to get the most accurate and relevant news is to follow key players in the meme economy; a lot of really quirky entrepreneurs like Elon Musk and Mark Cuban are sharing their advice online be it on Twitter or twitch and there are great communities like WallStreetBets on Reddit are very good to see what retails investors are doing.
I got to say I LOVE LOVE what is going on with #wallstreetbets. All of those years of High Frequency Traders front running retail traders,now speed and density of information and retail trading is giving the little guy an edge. Even my 11 yr old traded w them and made $
— Mark Cuban (@mcuban) January 28, 2021
The very first rule when it comes to getting in the stock market is to know what the company which shares you’re buying is doing. This way you can understand how different news and events will affect the value of its shares; it’s also important to know if hedge funds are against that company.
Retail investors on Reddit are gamers who grew up with GameStop and still value in the retailer’s business; they decided to band together to save the company which was being short-sold by powerful hedge funds betting on its demise. A lot of the stonks favored by the internet community are companies like AMC and NOKIA that were once mighty in their domains but have fallen.
Every compelling story has to have an antagonist; in the meme economy hedge funds management companies Melvin Capital and Citadel are the meme investors nemesis: they’ve bet on the demise of GME and when being outsmarted, used their government connections and investment in Robinhood to screw over the little retail investor. Rumor has it, not a long time ago they tried to short sell Tesla.
Let’s talk about real stocks and Tesla which is at the time of writing the most valuable automotive company. For those wondering if Tesla shares are a good investment, let’s just say that in 2020 its value has grown faster than the almighty Bitcoin. Tesla has a company is also massively investing in the leading cryptocurrency which in return will only increase its share value.
Everything and its opposite has been said about Bitcoin but let’s be very clear; it is a formidable force to be reckoned with and even if its momentum is going to be stalled once in a while, its march towards disrupting the financial world is unstoppable. Many other cryptocurrencies will come and go but Bitcoin will prevail when it comes to replacing the gold standard.
This was just a glance at the meme economy and how it functions as a sub-culture; if you feel confident about what you’ve learned, you should listen to this incredible free flow glorifying how the retail investors o the WallStreetBets subreddit have beaten all the odds and have made a massive profit on their favorite meme stonk: GME.
You might not get all the subtle references but you should be able to understand what the song is about and might want to search for some of the people and companies mentioned that were not brought up in this post.