Meme Stocks Are Nothing New (And Some Long-Term Investment Ideas)
I’m currently reading The Money Game, by Adam Smith. This is an old book, that covers Wall Street and investing during the 1950’s and 60’s. Much of the content is dated (mutual funds aren’t popular anymore and a $1 million net worth isn’t going to buy Manhattan real estate like it did back then), however there is one aspect that really stands out.
And that’s the everlasting presence of meme stocks.
When you think of old-time investors, you probably imagine people prudently acquiring Coca-Cola or Exxon stock. In reality, the hottest buys of this era were companies like:
- Brunswick Bowling
- Zenith Electronics
People went crazy for these companies. Investors were paying massive premiums, banking on huge growth potential from far-off speculative events.
These businesses were the DocuSigns or Virgin Galactics of their day.
Today’s article dissects these dead companies from the past, highlighting the anatomy of a meme stock what makes bad investments so popular. I’ll also share some traits for good investments that can continually compound your wealth long-term.
Some Common Meme Stock Traits
Here are a few common threads I noticed when reading about bad (but trendy) investments of the past. These all carry over to today:
- Revolutionary Tech That Is A Little Complex Or Confusing — In the 1960’s, computer stocks were a huge deal. Everyone wanted in on these businesses, and The Money Game discusses a ton of hype companies that simply don’t exist anymore. While computers obviously did become a major part of daily life, many early retail investors had no idea how the technology actually worked. They blindly bought what was recommended to them, hoping it would go up in value. Stop me if you’ve heard that one before.
- Future Trend With Likely-But-Unclear Outcome — TV manufacturers were another meme stock sector during the 1960’s. Essentially, there was a report indicating that “90% of American households would own a color TV” one day. Investors poured into stocks like Zenith and Motorola, assuming they were ahead of the curve…