📊Investing in the Buzz: MEME ETF

Dissecting the landscape of meme stocks and the advent of the first ETF specifically designed to track this new genre of equities.

Jul 25, 2023

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Daily Educational Content [Free]:
Investing in the Buzz: MEME ETF
The Dawn of Meme Stocks
The MEME 0.00%↑ ETF: Unveiling a New Market Frontier
Implications of the MEME 0.00%↑ ETF
Case Study [Free]:
Wall Street Bets Data on TrendSpider Platform
Bottom Line
Wall Street Insider Report
Market Cycle and Alfa Hedge Portfolio II Update [Premium]

Investing in the Buzz: MEME ETF

The Dawn of Meme Stocks

In a world where social media is increasingly intertwined with daily life, it's no surprise that it's started to shape the stock market.

Meme stocks, a product of this new social-media-driven reality, have challenged traditional financial norms, demanding innovative tools to navigate their unique dynamics.

Understanding Meme Stocks

A meme stock is a share in a company that has seen a sudden surge in popularity on social media, particularly on platforms such as Reddit and Twitter.

These stocks often exhibit volatile prices as their trading volumes are largely driven by individual retail investors' sentiment rather than traditional financial indicators like company performance or macroeconomic factors. Notable examples include GameStop GME 0.00%↑ and AMC Entertainment AMC 0.00%↑.

The MEME 0.00%↑ ETF: Unveiling a New Market Frontier

To harness the power of this new market segment, the world's first Meme Exchange Traded Fund (ETF) was launched.

Birth of the MEME 0.00%↑ ETF: A Pioneering Step

Launched on December 8, 2021, the MEME 0.00%↑ ETF was designed to offer investors exposure to the performance of US-listed meme stocks.

Crafted by the financial services firm Roundhill Investments, this ETF represents a revolutionary step in the financial world by trying to capitalize on the meme stock trend.

Mechanics of the MEME ETF

The MEME 0.00%↑ ETF, rather than focusing on individual companies, tracks the performance of an index of stocks experiencing heightened interest on social media.

It's comprised of 25 equally-weighted US stocks that have high short-selling interest coupled with a high degree of social media activity.

The ETF's holdings are rebalanced quarterly, maintaining the ETF's adaptability to the rapidly changing meme stock environment.

Diverse Industry Representation

The ETF covers a wide array of sectors, including information technology, consumer discretionary, communication services, and more.

This diverse industry representation adds an extra layer of diversification for investors, reducing the risk associated with investing in a single sector or stock.

Expense Ratio and Other Details

The MEME 0.00%↑ ETF carries an expense ratio of 0.69%.

This refers to the percentage of the fund's assets used for administrative and other operating expenses.

While this may be higher than traditional ETFs, it's important to remember that the MEME ETF offers a unique investment strategy, which could justify the higher cost for some investors.

Implications of the MEME ETF

The MEME 0.00%↑ ETF reflects the growing influence of social media on the stock market, demonstrating the potential for crowd sentiment to shape financial outcomes.

Democratization of Investing

By focusing on stocks popular among retail investors, the MEME 0.00%↑ ETF supports the trend towards the democratization of investing.

It's an accessible way for everyday investors to participate in the volatile world of meme stocks without having to constantly monitor social media trends or individual stock performance.

The Risk Factor

The MEME 0.00%↑ ETF's focus on volatile meme stocks also introduces significant risks.

Since these stocks can be heavily influenced by online hype and sentiment, they can experience rapid price swings. Investors should therefore be prepared for potential losses and consider this ETF as part of a diversified portfolio.

📈Case Study: Wall Street Bets Data on TrendSpider Platform

The TrendSpider Platform created the Wall Street Bets Indicator.

TrendSpider, in partnership with Quiver Quantitative, tracks and logs the number of times a symbol is mentioned on the popular investing subreddit Wall Street Bets (r/wallstreetbets) and allows you to display the mention tracker data on the bottom of your charts.

In this documentation, we will explore how to:

Add Wall Street Bets Data on Chart
Customize Wall Street Data on Chart
Using Wall Street Bets in Smart Watch Lists
How Wall Street Bets Data is Assembled
How Wall Street Bets Data is Categorized

source: Wall Street Bets Data

Let’s see a example of this indicator in the case of Game Stop GME 0.00%↑ on 2021.

The GME Short Squeeze Case

The GME stock short squeeze was a financial event that occurred in January 2021, involving the American video game retail company GameStop (NYSE: GME) and other assets.

A short squeeze is a situation where investors betting on a stock's decline (short selling) are forced to buy the stocks to cover their positions, generating high demand and an increase in the stock's price.

The GME short squeeze was initiated and mainly driven by users of the subreddit r/wallstreetbets, an internet discussion forum about the financial market, although some hedge funds also participated.

About 140% of GameStop's available shares had been short sold, and the race to buy the shares to cover these positions caused the price to rise even further. The short squeeze caused the company's stock price to reach a pre-market value of over $500 per share on January 28, almost 30 times the value of $17.25 at the beginning of the month. The price of many other heavily short-sold assets and cryptocurrencies also increased.

On January 28, some brokers, especially app-based brokerage services like Robinhood, stopped buying GameStop and other assets, citing their inability to post sufficient collateral in clearinghouses to execute their clients' orders. This sparked much criticism, investigations, lawsuits, and political reactions.

source: invezz.com

The GME Short Squeeze Case and Wall Street Bets Data (white line) on TrendSipder Platform

On the graphic above, the white line on the bottom is the Wall Street Bets Data.

Observe the right scale of Wall Street Bets Data, the number of mentions of GME 0.00%↑ increased from 7,150 in November/20, to 19,007 in December/20 and and finally 108,463 in Jan/21. In Jan/21 the stock price increased +1,610%.

The good news about the MEME 0.00%↑ ETF is that the issuer does this research for you, and other good news is that knowing how to read the Market Cycle, you can do your own research and know exactly when to enter and exit any asset.

In what time of the Market Cycle are we now?

It depends on what market. Bonds? Stocks?

Every business day we update the evolution of the Alfa Hedge Portfolio II.

Premium Subscribers have full access to our Alfa Hedge Portfolio II in a Real-Life Brokerage Account in Real Time.
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Bottom Line

The MEME ETF underscores the significant impact of social media on the financial markets.

While it introduces new opportunities for investors to capitalize on meme stock volatility, it also presents unique risks.

As the line between social media trends and financial market dynamics continues to blur, the MEME ETF exemplifies the adaptive strategies investors may need to consider.

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