You know me as “the dividend guy” on Money & Markets. And that’s true.
But dividends aren’t the only topic on my mind.
In my revamped Investing With Charles video segment, I’ll give you my take on everything from the hottest market topics to the global economic landscape.
I’ll help you make sense of it all on your quest to become a better investor.
And I’m bringing my colleague and research analyst Matt Clark along for the ride. You might recognize him from other popular YouTube segments including the Marijuana Market Update, The Bull & The Bear, and Ask Adam Anything.
He’s here to keep me on track so I can give you more of what you want: sound investing insights.
Check out Investing With Charles below!
Investing With Charles Preview
For a taste of what to expect in my new video series, check out this transcript from the first video where Matt and I wrestle with meme stocks and how you should approach investing in them:
Matt: They’re called meme stocks because these are stocks that have received a lot of retail investor attention from avenues like Reddit.
Retail investors are not big institutional market makers. They are not big firms that place orders for millions and millions of shares of stock on a daily basis.
Charles: They’re regular people.
Matt: Retail investors are like you and me. We’re trading shares, but we’re not doing it nearly to the volume (of institutional investors). So retail investors were drumming up support for stocks like GameStop (NYSE: GME) to start, Blackberry (NYSE: BB) and AMC (NYSE: AMC).
Charles: A lot of these are COVID reopening plays, or deeply beaten-down value stocks. Many of which actually did have some value.
This is where it gets funny with meme stock land. It’s not that these people were crazy or that the original investment thesis was that off. A lot of times, it was actually spot on.
If you looked at the original investment thesis for GameStop seven or eight months ago, the investment thesis was: Look, this is a heavily, heavily, heavily shorted stock. I mean, you just light a little match here, kaboom! You’re going to have a short squeeze — an epic short squeeze. And that’s exactly what happened with GameStop.
Now, what happens is some of the Johnny-come-latelies didn’t quite understand short squeezes and jumped on too late and got burned. Regardless, the fundamental reason to enter the trade was valid.
It’s a meme stock. It’s fueled by social media. It’s fueled by a lot of regular and oftentimes inexperienced investors trading stock tips via social media. And they don’t always know the inside scoop, right?
And so what happens is these things take on a life of their own. And you get something like AMC, which I wrote about in Money & Markets recently. With AMC, the stock blew up from less than $10 a share to over $60 in a matter of weeks. And what’s interesting is that AMC was on the ropes. It was about to be bankrupt because of the COVID shutdown.
And now the shares are trading well above their pre-pandemic levels. You can make a case that the shares need to recoup a lot of their losses and trade near pre-pandemic levels maybe. But what happened was they overshot that.
This is an industry, by the way — movie theaters — that was suffering long before anyone had ever heard of COVID-19 for a few reasons: the abundance of content on Netflix and Amazon and everything else that you can watch in your house on a massive big screen TV. You can pop your own popcorn and not have to listen to a baby cry or someone cough and sneeze the entire time.
And that was, again, pre-pandemic. The movie business was not doing all that well. And then, of course, COVID comes along and blows it up. So this is where you look at the price action. And you’re like, “Who is buying this at these prices?”
This doesn’t really make sense. Now, this is not to go on a lengthy tirade about why … And this is why Matt’s here to prevent me from going on a lengthy tirade, right?
Matt: Again, traffic cop, and I’m holding the stop sign. [laugh]
How to Trade Meme Stocks
Charles: Yes. Anyway, the point is not to bash meme stocks or the people trading them. It’s more just to keep a little perspective here.
There’s nothing wrong with trading these things. This is where the action is. Again, AMC stock went up by a factor of six or seven from its recent lows to just recent highs. It’s given back half that, but what a run!
If you got in close to those lows and sold close to those highs, you’ve made your money for the year. You can just take the rest of the year off.
So, I’m not ever going to tell anybody to avoid these because this is where the action is. You can make a ton of money. I’m just going to recommend you be careful. When you see this kind of action and valuations … it doesn’t make sense. Today, AMC trades at a premium to its pre-pandemic levels. It doesn’t make sense.
You don’t want to hold … you don’t want to stick around too long. If you do decide to trade these stocks, trade them, have fun, have an exit plan, be disciplined and know when to get out.
For each person, [this plan] is going to be a little bit different. But just set your rules before you get in the trade so that you limit your losses. And you know what you’re up against because the meme stock thing is almost a distraction from the bigger picture, which is the overall nuttiness of the market right now.
To hear the rest of my conversation with Matt, and find out my take on the wild market we’re dealing with right now, click here to watch the rest of my Investing With Charles video.
If there is anything you’d like me to tackle in a future video, don’t hesitate to email your ideas to email@example.com. I’d love to give my perspective on any market or economic topics burning in the back of your mind.
Where to Find Us
Coming up this week, Matt will have more on The Bull & The Bear podcast, so stay tuned.
Don’t forget to check out our Ask Adam Anything video series, where chief investment strategist Adam O’Dell answers your questions.
You can also catch Matt every week on his Marijuana Market Update. If you are into cannabis investing, you don’t want to miss Matt’s weekly insights.
Remember, you can email my team and me at firstname.lastname@example.org — or leave a comment on YouTube. We love to hear from you! We may even feature your question or comment in a future edition of Investing With Charles.
To safe profits,
Editor, Green Zone Fortunes
Charles Sizemore is the editor of Green Zone Fortunes and specializes in income and retirement topics. He is also a frequent guest on CNBC, Bloomberg and Fox Business.