Beware of the Meme Stocks

“For where your treasure is, there your heart will be also.”

— Matthew 6:21

Dear Outsider,

Happy Martin Luther King Jr. Day.

Markets are closed, so I wanted to share a personal anecdote with you.

If you’ve been following me these last two years, you know I’m a musician of sorts.

I can play string instruments well enough to get by, but my main instrument is the drums.

My parents bought me my first drum kit out of a Sears catalog back when I was in elementary school.

We would listen to cassette tapes in the car, and I could tap out patterns on my knees, so they thought it was worth a shot.

I was around 10 years old at the time, but I couldn’t play the skins to save my life.

A kid from the neighborhood came over who knew how to play and showed me a couple tricks, and it helped a bit.

Soon, I was playing along to Queen, the Beatles, and Nirvana CDs.

It wasn’t until another kid from the neighborhood said my playing sounded sloppy (he could hear it coming from the basement) that I decided to quit.

“Yea, I guess he’s right, I am pretty sloppy,” I thought. “Maybe I’m just not cut out for this.”

It’s amazing how truthful yet mean and unconstructive kids’ words can be.

So I laid the sticks down for three or four years.

It wasn’t until high school that I was listening to a song — and it just clicked.

I knew how to play the drums.

It didn’t matter that I hadn’t played in years... hadn’t taken any lessons… hadn’t touched my drums since that sloppy rendition of “Smells Like Teen Spirit”… I just knew I could play.

From then on, I could play anything I heard — granted, I’m not classically trained and I went to a very small school, so we didn’t even have a marching band.

I started playing with a friend who could play anything on guitar.

His dad had built a cabin up in the Pennsylvania woods, and he’d hauled an old drum kit up to the loft.

The first song we jammed to was “Brain Stew” by Green Day.

After that, we were playing Black Sabbath, Led Zeppelin, the Killers — you know… the good stuff.

Then in 11th grade, I got a world of experience playing live in a band.

I call it my School of Rock moment.

We had an Ancient History and Ancient Literature teacher who used to dress up in armor and really get us excited about the content we were learning.

Well, it turns out he was an old Byrds fan and played guitar in psychedelic bands throughout his career.

He decided to form a band composed only of students.

We played the Byrds, Jefferson Airplane, the Velvet Underground, Canned Heat — also the good stuff.

We played gigs around town and it gave me invaluable experience.

I still play today and love every minute of it.

Now, none of this would have happened had I not put in that seemingly small amount of practice time when I was a little kid.

It was that practice that planted the seed, and all it took was time to let that seed grow and the connections form in my brain.

Once that happened, there was no stopping it.

It’s the same with investing.

That little bit of money you put in the market 20, 30, 40 years ago is undoubtedly worth a fortune today.

Which brings me to the quote above.

Your treasure is where your heart lies.

We all have a limited amount of time, energy, and money on this earth.

Whatever you value the most is where your money, actions, and attention will be focused.

It’s just human nature.

It’s a strategy I often use to choose companies to invest in.

Do I believe in what the company is doing?

Who is on the management team?

Are they helping people?

Do they make a product that people need and not just want?

Some people find joy in buying meme stocks.

We’ve seen that this week with some crazy price swings in certain companies.

GameStop rose 18%...

AMC soared 25%...

And Bed Bath & Beyond rocketed 140%!

But does anyone really believe in these companies long term?

I’m assuming that's not the case and that meme investors are just looking to make a quick buck and burn the shorts in the process.

It’s hard not to join the party and chase these stocks, but as Robert Kiyosaki says in Rich Dad Poor Dad, “The point I would like to make is that investments come and go. The market goes up and comes down. Economies improve and crash. The world is always handing you opportunities of a lifetime, every day of your life, but all too often we fail to see them. But they are there. And the more the world changes and the more technology changes, the more opportunities there will be to allow you and your family to be financially secure for generations to come.”

My advice is to invest where your heart lies.

Keep making your money work for you, not the other way around, and we here at the Outsider Club will help steer you in the right direction to the best trades we’re looking at.

I’m currently in the process of creating my own personal dividend calendar that I'll set up to pay out dividends every month of the year.

I’ll be sure to share it with you once I’m finished.

In the meantime, make sure to sign up for our exclusive mailing list, The Back Office, where we reveal the inner workings of our publishing business and also give members exclusive access to beta-test programs.

We may even give away some free products...

All you have to do is follow this link and enter your email address.

Stay frosty,

Alexander Boulden
Editor, Outsider Club

After Alexander’s passion for economics and investing drew him to one of the largest financial publishers in the world, where he rubbed elbows with former Chicago Board Options Exchange floor traders, Wall Street hedge fund managers, and International Monetary Fund analysts, he decided to take up the pen and guide others through this new age of investing. Check out his editor's page here.

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