Last month, I brought you the infamous Inverse Cramer ETF, a theoretical actively managed portfolio that tracked the inverse performance of Cramer buys and sells. Before that, we brought you BECKY ETF, a hypothetical fund tracking the stocks of 10 companies loved by upper-middle-class American white girls.
Naturally, we had to go further. In our quest to find the most outlandish, speculative, and borderline ridiculous investments out there, we came up with an idea for an ETF that would top both. And where better to start than the current meme stock craze? Thus, the idea for the Meme Stock ETF was born.
What is a meme stock?
A meme stock can be defined as a stock that gains viral popularity among retail investors through social media. We commonly see these arise from discussions in Reddit communities, TikTok videos, or YouTube channels that endorse certain stocks.
Why do some stocks become meme stocks? I’m honestly not sure. Some people will claim fundamentals. Others will claim momentum. Some will say it’s a conspiracy by Wall Street to manipulate prices and short companies into oblivion. Many will simply declare, “I like the stock.”
The craze began with the January 2021 GameStop (GME) short squeeze that sent the prices of other beaten-down, heavily shorted stocks like AMC Entertainment (AMC), Bed Bath & Beyond (BBBY), Nokia (NOK) and BlackBerry (BB) soaring.
Colourful characters like the entire r/WallStreetBets community, self-proclaimed “Apes,” and now legendary investor Keith “DeepF*ckingValue” Gill rallied behind their chosen meme stocks to earn obscene fortunes (or, more often, book large capital losses).
Since then, the craze has continued in peaks and valleys. Many of these stocks continue to possess high volatility and swing 10% or more unpredictably intra-day. Numerous other communities have sprung up to support their chosen stocks, like r/Superstonk for GME investors.
Movements like the “direct registration” (DRS) campaign for GME have begun responding to perceived Wall Street corruption. Activist shareholders like Ryan Cohen and Elon have continually whipped fans into a frenzy over their social media activity.
Is a Meme Stock ETF possible?
I’m going to say yes. It would be quite easy, actually – an equal-weighted portfolio of the most mentioned tickers on social media, reconstituted and rebalanced quarterly. Slap a 0.75% management expense ratio on it, and you have a lucrative and popular ETF. Bonus points if you put the r/WallStreetBets logo on the cover page of the SEC prospectus for laughs.
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