Sep 14, 2022
You may recall that at the beginning of 2021, the stock prices of AMC and GameStop skyrocketed. There were numerous news articles about people driving up the prices of companies that were not otherwise exceptionally profitable investments. This week on the podcast, Grant dives deep into what caused t Meme Stock Rally of 2021, as well as the importance of investing our portfolios as prudent, long-term investors.
[03:20] Meme Stock Rally - Grant recalls the events that transpired during the 2021 Meme Stock Rally involving AMC and GameStop.
[10:41] Two Options – Grant explains how short-selling stocks and the options market are the two most common ways to wager against a company.
[21:05] Changes - Grant outlines in broad terms how AMC and GameStop have changed as a result of this chain of events.
[26:22] Research – Grant presents the conclusions of the in-depth research that was conducted on the Meme Stock Rally at both the SEC and Harvard.
[34:30] Lessons – Grant explains how the Meme Stock Rally serves as an excellent lesson on time horizon and irrationality, illustrating how wise investors should consider investing in their portfolios.
Resources:
Did Pandemic Stimulus Funds Spur the Rise of 'Meme Stocks'?: hbswk.hbs.edu/item/did-pandemic-stimulus-funds-spur-the-rise-of-meme-stocks
How AMC rode the meme stock rally to revitalize its business: cnbc.com/2022/01/26/how-amc-rode-the-meme-stock-rally-to-revitalize-its-business.html
Robinhood almost imploded during the GameStop meme stock chaos: techcrunch.com/2022/06/27/robinhood-report-meme-stock-gamestop/
Robinhood and CNBC's Jim Cramer fuel stocks for "stimmy" rally: cbsnews.com/news/robinhood-jim-cramer-stimulus-stock-market/
Stock Market Stimulus: hbs.edu/faculty/Pages/item.aspx?num=62111