#4
Chasing Hot Stocks and Meme Stocks
GME: $483 to $40. Retail buys trending stocks, loses 4.8%/month avg. Smart money already sold.
Chasing hot stocks like GameStop, which surged from $20 to $483 in January 2021 before crashing to $40 by February, traps retail investors—most bought between $200–400 and lost 70–90%. AMC and BBBY (now bankrupt) followed identical patterns. The excitement of social media movements feels real, but the returns are not—these bets produce no data-backed edge. Sticking with diversified index funds avoids this volatility trap.
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