Back in January 2021, an online moniker named “Roaring Kitty”, created a frenzy for “meme stocks” among retail investors.
Meme stocks are companies that have a cult-like following on social media.

He eyed out gaming retailer GameStop (NYSE: GME) and pumped up the stock in online boards.

As a result, GameStop’s shares soared more than 2,000% in January alone.

That’s an incredible return if you managed to buy in early!

But, of course, the stellar run on the share price didn’t last…

If you “FOMO’d” in at its highs, you would’ve lost 87% over the next three years.

Now, if you didn’t get burned investing in GameStop back in 2021, today gives you another shot…

Roaring Kitty is back…

And that has reignited interest among investors who chase meme stocks.

GameStop is up 350% in May so far!

Other meme stocks are back with a vengeance, too.

Remember, during the Pandemic, US movie theatre company, AMC Entertainment, nearly collapsed? And then it was revived by the meme stock frenzy, which saw its shares rally around 400%.

Of course, just like GameStop, AMC’s shares subsequently lost over 90% of its value over the next three years.

Because of the recent meme stock frenzy, AMC’s shares are up +60% in a month.

And then the newest member to join the meme stock club is Trump Media & Technology Group (Nasdaq: DJT).

The stock started trading in March of this year when it merged with a special purpose acquisition company (SPAC).

Investor enthusiasm for the company or more specifically, enthusiasm for majority-owning shareholder Donald Trump – sent the stock soaring on its first day and put its market cap at almost $10 billion.

But much like GameStop and AMC, the company’s fundamentals couldn’t justify that valuation. It’s now down +21% from its high.

It goes without saying that buying GameStop, AMC or Trump Media now is a great way to lose money.

The lesson here is…

Don’t consider a stock’s popularity or social media presence when investing.

Sure, if you’re lucky to enough to get in early before the meme stock soars, you can make BIG money.
But how often does the average investor get timing the market right? Not very often. So, the chances of losing a lot of money are much higher.

That’s why, for risk-adverse investors, avoid recklessly speculative investments. This includes SPACs, meme stocks and most cryptos.

Instead, you can make good money in fast-growth mega trends by focusing on companies with…

• Robust and growing sales and earnings
• Superior technologies or product offerings
• A moat around their business

The incredible share price rallies of companies like Nvidia and Super Micro Computers proves this. Check out our megatrend stock reports, free, with a subscription to South African Investor.

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