Meme Stocks Are The Ultimate Metaphor For Modern Investing
Plenty of pomp and circumstance, but fundamentally lacking in substance
From an ROI standpoint, in today’s economy, pursuing a business venture is arguably more fruitful and less of an albatross than borrowing money to attend an expensive school. Hear me out. Student loans are like investing in meme stocks — it may appear like a good opportunity from the outside when reading about average people striking it rich from market surges, but it’s tantamount to scratching a lotto ticket. An expensive degree is much less useful without corresponding social capital, and meme stocks aren’t the road to riches for the majority of retail investors. The house always wins.
Breeding a culture of mistrust
Money certainly buys opportunity, except not for the 99%. Consider this. We live in a culture which encourages teenagers and their families to saddle themselves with crippling student loan debt to mortgage their future for entry into an economy offering stagnant wages, a shrinking job market, and many barriers to entry and glass ceilings to boot. However, those same teenagers would be laughed out of that same bank if they asked for a $50K small business loan instead.
The ‘us vs. them’ mentality we witnessed in January’s GameStop Wall Street debacle over meme stocks is a symptom of bigger societal problems which have been brewing for decades. Simmering desperation and class stagnation were exacerbated by the 2008 recession, from which many of the 99% never recovered. According to Schwab survey data, Millennials are more than 50% of all new investors and they began trading during the pandemic in an effort to “build an emergency fund or to gin up another source of revenue.” Loose ‘brotherhoods’ of retail investors congregate on social media platforms swapping stories, tips and reclaiming control as they plot their next moves to try and grab a slice of the pie. Average folks have suffered repeated economic blows while the wealth gap widens, ergo it’s understandable the backdrop of today’s investing landscape is rage and deep distrust of the establishment.
Let’s play a game
Video games have been a cultural force for decades, but it seems that the same energy has migrated to modern investing. Modern trading feels like a game when one tweet from a media figure like Elon Musk can impact price movement more than the rapid-fire of a modded controller. While it can be fun to watch from the sidelines, this attitude highlights how trading has been gamified through investing apps like Robinhood which are “dependent on online trading frenzies” to enrich the already-rich.
This is slightly terrifying when we remember that most of the accelerated price growth in meme stocks are damn near baseless because the move has no inherent value. The company’s management did nothing so erratically different to deliver the type of earth-shattering results that would warrant the exponential percentage gains exhibited by a meme stock. For better or worse, the price is driven by arbitrary opinions and thoughts of major media players and social collusion. Technology can certainly make trading feel like a game, but the money lost is very real.
Objects in mirror are closer than they appear
Money is a cultural reflection, and modern investing is no different. Investing has long been reserved for folks with sufficient disposable income, but conditions have changed. Mistrust permeates the industry, unqualified media figures influence stock prices with their tweets, and socioeconomic conditions have steadily disintegrated for the 99%. The traditional stepping stones for social mobility enjoyed by previous generations can’t be relied upon anymore. Post secondary education used to be the ticket to a higher socioeconomic class and cushy life, but now it’s a debt albatross. Previous generations weren’t forced to contend with today’s investing apps which are conspiring against us, designed to incentivize mindless trading, profit from our worst impulses, and enrich the bourgeoisie. These conflicts of interest seriously call into question the ethics between financial markets and modern-day investors.
During Robinhood’s Congressional hearing in February, Maxine Waters said: “Many Americans feel that the system is stacked against them, and no matter what, Wall Street always wins” and she’s right. Socioeconomic turmoil has been brewing for the past century, so in many ways, GameStop’s social collusion and the emergence of volatile speculation-fueled stocks feels somewhat inevitable. Like with the postwar era where Godzilla emerged from nuclear waste, in the wake of the Great Recession, meme stocks have emerged from the depths of the financial wasteland.
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