The "Meme Stocks" and Crypto Craze

Do they make any sense as investments? SPECIAL OPPORTUNITIES [The Oxford Club Special Opportunities]( The "Meme Stocks" and Crypto Craze Matt Benjamin, Senior Markets Expert, The Oxford Club [Matt Benajmin] Many market analysts have cast a highly skeptical eye on a couple of investment opportunities that have become wildly popular over the past year. That's because, by traditional fundamental analysis, they just don't make any sense... at all. I'm talking, of course, about cryptocurrencies, like Bitcoin and Ethereum, and the so-called "[meme stocks]( - such as BlackBerry (NYSE: BB), AMC Entertainment Holdings (NYSE: AMC) and GameStop (NYSE: GME). How cryptocurrencies work and what they may be good for - a store of value or, eventually, an actual exchange medium - remain mysteries to most investors and even many crypto enthusiasts. And crypto volatility is... well, insane. Bitcoin, the best-known and largest crypto by market cap, has swung wildly this year from about $29,000 to more than $64,000. It's back down to around $36,000 as of this writing. And as for meme stocks... their valuations don't come close to matching their sales or earnings figures. For example, AMC's market cap - which is at about $21 billion - is bigger than the market caps of around 200 of the S&P 500 Index stocks. Yet its sales and earnings don't even compare. Can You Outlast Them? Absurd valuations, inscrutable business models and cult followings - these investing fads have many similarities, as well as differences. But one thing is clear about both crypto and meme stocks: Just because they don't make sense to you or someone else doesn't mean they won't stay at current levels... or go even higher. As famed economist and investor [John Maynard Keynes]( once put it, "The stock market can remain irrational longer than you can remain solvent." That is, even if you're correct that a particular investment is overvalued and will eventually decline in value, you can still lose money betting against it because the market can outlast you. I'd add a corollary to this rule: You can still make money on such an investment too. Oxford Club Chief Trends Strategist Matthew Carr outlines this for meme stocks in [a recent article that's a must-read]( if you're interested in these companies - even if just as a market curiosity. Matthew, who is usually on the cutting edge of every investing and market trend, includes this chart of the "BANG" stocks - BlackBerry, AMC, Nokia (NYSE: NOK) and GameStop. [Year-to-Date Return of BANG Stocks] As you can see, several of them have exploded in price this year, despite massive media coverage about why they don't make sense as investments. Meme stocks have been bid up by Reddit users who believe these companies - most of them abandoned as defunct dinosaurs by Wall Street - still have significant value... In some cases, they have a personal affinity for the companies and want to prove short sellers and hedge funds wrong. And, interestingly, the meme stock phenomenon could end up being a self-fulfilling prophecy. That's because several of these once-ailing companies took advantage of the sudden enthusiasm for their shares and raised significant new capital by selling new shares to the public. This may give them the capital they need for a second act in the market. These companies are loving the attention and the unexpected opportunities to raise new capital. As Matthew says in his article, "No one cares if you think their valuations are insane (because they are) or that the investment thesis is flawed (it is)." Well put, Matthew. Crypto Craziness As for cryptos, because they are such a new and unique asset class, it's all but impossible to value them by any traditional measures. For that reason, they're subject to the social media whims of famous investors, like Tesla (Nasdaq: TSLA) co-founder and CEO Elon Musk, not to mention headlines about Chinese crackdowns on crypto and cybercriminals demanding ransoms in Bitcoin... And those types of events are impossible to predict. So if you're interested in these various assets - either cryptos or meme stocks - here's some advice... - Don't short these assets or assume they can't go higher. Keynes and Matthew are spot-on here. It may not matter that they don't quite make sense as investments. You can still get burned betting against them. - If you do want to invest in these assets, put only a very small amount of money into them. I would say 2% to 4% of your portfolio. [Chief Investment Strategist Alexander Green recommends even less]( saying to invest "about as much as you'd be willing to lose on a weekend in Las Vegas." - Finally, focus the bulk of your portfolio on companies with solid fundamentals and stock prices based on sales and earnings. Sure, meme stocks and cryptos may soar in the short term, but in the long term, prices follow earnings. That much you can bet on. If you're looking for a full discussion of what's in store for markets and the economy - including meme stocks, cryptos and much, much more - for the second half of 2021, [you can't do better than the Investment U Master Plan](. Recently, we gathered our team of top financial analysts - as well as several guest experts - for our 23rd Annual Investment U Conference in St. Petersburg, Florida. And during this closed-door gathering, the speakers unveiled the most potentially revolutionary trends to watch right now... as well as the individual opportunities that could have the biggest and most lasting impact on investment portfolios as the stock market booms in the months ahead. The recordings from those remarkable presentations are now live, and if you want to get details on some of the top investment experts' best opportunities, [you'll want to click here right now](. Enjoy your weekend, Matt SPONSORED [GW Blank Sign]( [The Biggest Moneymaking Event of 2021]( Nothing compares with the life-changing strategies, opportunities and insights shared at our annual Investment U Conference. We're talking ideas that have led to potential gains as high as 1,225.65% - in just under six months! And now there's a way for you to "attend" the event - and get access to every massive moneymaking strategy - from the comfort of your own home. 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