Ordinarily, we investors would focus on how the major stock market averages performed over the last week and what we expect from the economy and individual cooperate performance for the second half of 2021.
A fistful of hot stocks would be a sidebar conversation that most investors wouldn't even know about, nor care about.
But these are not ordinary times. Meme stocks, the ones that are highlighted on Wall Street Bets/Reddit are the main story. We can understand why. It's highly unusual, speculative, and has become a rally call for people who have strength in numbers, and who feel this is a way they could bend the economic curve to be more in their favor.
The good news for these meme stocks company's' meteoric rise is that they get to sell new shares into the market place, raise capital, and shore up their balance sheets. They go from near-insolvent to solvent, which removes immediate concerns of bankruptcy. That's favorable for the meme companies.
But these stocks trade at sky high valuations, compared to their fundamentals. We investors are ok with paying up for stocks of companies that we expect to thrive, not just survive. This is the issue. Obsolete business, over indebtedness, and the need to reinvent themselves rapidly. In a time of runaway leaders like Netflix and Xbox, it's hard to even imagine a scenario in which these meme companies grow into their lofty valuations.
So, who wins and loses? I don't even care. I'm happy to watch the spectacle from the sideline. It doesn't change a thing for my job, my duty to clients, or my personal finance. I have seen this movie before, no AMC Theater pun intended.
I've seen so many speculative bubbles in my career. The only difference this time is that the tools are more available (Robinhood) and the message spreads faster (social media). That sums it up.
Now to this week's 1 to 2 minute video highlights from my livestream, below, including topics like personal finance and investing.
Watch them all; they won't disappoint. And while you're there, please subscribe to my YouTube channel.
My livestream show is called Be the Boss of Your Money. I broadcast every Monday through Thursday at 4:30 PM EST on LinkedIn, YouTube, and Facebook. You could watch the replays immediately following the livestream on my timelines.
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Thanks and see you next week,
Mitch
