The meme stock frenzy may have died down from its fever-pitch levels during the COVID-19 pandemic, but there continues to be a wide swath of supporters for companies that are far from fundamentally sound and trade with heightened volatility.
To that end, Morningstar CEO Kunal Kapoor has a reminder to the growing retail investor community still playing stocks such as AMC (AMC), GameStop (GME), and Bed Bath & Beyond (BBBY) in the hopes of quick and easy gains: Please use extra caution and think about long-term investing approaches.
“My hope is that even as maybe people have been using some of their fun money, so to speak, to do some of the meme stock investing or maybe investing in crypto or what have you, that the serious part of their investing is really starting to transition to things that over time help them build wealth,” Kapoor said in a new Yahoo Finance Presents episode.
There are small signs that retail investors are looking to practice Kapoor’s more disciplined approach in 2023.
About 64.3% of those polled in a new Finimize survey say they will take any surplus income next year and buy shares of mega-cap tech stocks like Apple (AAPL), Microsoft (MSFT), Google (GOOG, GOOGL), Meta (META), and Netflix (NFLX).
In other words, the individual investor appears to be hunting for value in predictable businesses now trading at steep discounts to their historical valuations. The rest of the respondents mostly plan to dabble in software and renewable energy names as well as other companies that are fundamentally sound.
Meanwhile, 85% of those polled have never bought a meme stock, according to Finimize’s survey. It’s hard to see this dynamic shifting — i.e., no new supporters for these meme stocks — if the economy slows further, hammers these risky names even more, and causes some meme stock believers to finally toss in the towel.
The performance of meme stocks this year helps explains the muted appetite for sparking a resurgence in meme names.
GameStop reported yet another fundamentally poor third quarter. Shares of the video game retailer have tanked 45% year to date.
And Bed Bath & Beyond is on its last legs as it battles through what looks to be a challenging holiday shopping season. The stock has crashed more than 80% this year.
“I’m okay with some of the excitement petering out [in meme stocks],” Kapoor added. “What I think is critical though is that people stay engaged with their money because you want to start ensuring that when people think about their money, they’re also thinking about the long-term outcomes that they’re hoping to get to.”
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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Source: https://finance.yahoo.com/news/morningstar-ceos-message-to-meme-stock-investors-162841912.html