Any Disadvantages to a Blue Chip Stock Becoming a Meme stock

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DTalos
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Any Disadvantages to a Blue Chip Stock Becoming a Meme stock

Post by DTalos »

I don't know the rhyme or reason why certain stocks become "meme" stocks, but as far as I know, I don't think they have included any "Blue Chip" stocks. Of course that could change tomorrow LOL. Are there any disadvantages to a blue chip stock becoming a "meme" stock? If a stock in your portfolio becomes a "meme" stock, what should one do?
mhalley
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Re: Any Disadvantages to a Blue Chip Stock Becoming a Meme stock

Post by mhalley »

When you buy a stick, You should have an ips on what to do with it. You should have a price at which you would sell the stock, whether at a loss or at a gain, the reason doesn’t it reached that price doesn’t matter.
wetgear
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Re: Any Disadvantages to a Blue Chip Stock Becoming a Meme stock

Post by wetgear »

Owning the haystack means I've probably owned/own some meme stocks but I haven't noticed any issues with that as it's diversified out enough not to matter.
HyperCat
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Re: Any Disadvantages to a Blue Chip Stock Becoming a Meme stock

Post by HyperCat »

I think the odds of that happening are slim, since most corners of the internet that deal in meme stocks refer to them as "blue chip boomer stocks" or similar terms. They're associated with the old ways and are inherently uncool.

If you're lucky enough to have the problem of a blue chip you own skyrocketing, I'd just ride it out. If it got truly crazy you could think about hedging the downside with puts or shorting (though TSLA shorts have never been a winning proposition...).
rebellovw
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Re: Any Disadvantages to a Blue Chip Stock Becoming a Meme stock

Post by rebellovw »

If a Blue Chip was to shoot up like mem crazy - I'd expect all the old timers to cash out - and the company left owned by tweens.
JBTX
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Re: Any Disadvantages to a Blue Chip Stock Becoming a Meme stock

Post by JBTX »

Poor RadioShack. If they could have just held on for a few more years perhaps Musk and roaring kitty would be tweeting their praises.
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peetsperk
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Re: Any Disadvantages to a Blue Chip Stock Becoming a Meme stock

Post by peetsperk »

One of the many advantages to just buying the index is you don't have to worry about things like this. CNBC has 55 hours of investment programing they have to fill every week. Meme stocks are another byproduct of their need to exaggerate the importance of such things to increase viewership for the benefit of their true customers which includes most of the big brokerage firms. Meme stocks are one of the better examples of recent noise on the Street. Afterall, it doesn't fill much of their allotted programming time to simply tell people to buy the index, even though many would be much better off if they did. :beer
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DTalos
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Re: Any Disadvantages to a Blue Chip Stock Becoming a Meme stock

Post by DTalos »

mhalley wrote: Mon Jun 07, 2021 7:49 pm When you buy a stick, You should have an ips on what to do with it. You should have a price at which you would sell the stock, whether at a loss or at a gain, the reason doesn’t it reached that price doesn’t matter.
Did not know one should have a price at which to sell. Lots ot variables involved in deciding when to sell. I would be worried about a blue chip stock becoming a meme stock, because of the reputation for volatility and what would happen if all of a sudden milions sell.
calwatch
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Re: Any Disadvantages to a Blue Chip Stock Becoming a Meme stock

Post by calwatch »

I think this is one of the benefit of the equal weight index, so that certain stocks don't get overbalanced. Of course there may be fundamental reasons that the stock is doing well, like with the older tech names like Apple and Microsoft. There was some interesting discussion here: viewtopic.php?t=336402

I used to hold the equal weight index fund (RSP) but several years ago was convinced that a mid and small cap tilt was cheaper and accomplished similar goals, so that's what I did. Then again the expense ratio of RSP back then was about twice as much as it is now.
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Re: Any Disadvantages to a Blue Chip Stock Becoming a Meme stock

Post by ivk5 »

DTalos wrote: Tue Jun 08, 2021 12:44 am
mhalley wrote: Mon Jun 07, 2021 7:49 pm When you buy a stick, You should have an ips on what to do with it. You should have a price at which you would sell the stock, whether at a loss or at a gain, the reason doesn’t it reached that price doesn’t matter.
Did not know one should have a price at which to sell. Lots ot variables involved in deciding when to sell. I would be worried about a blue chip stock becoming a meme stock, because of the reputation for volatility and what would happen if all of a sudden milions sell.
Might need to start with what is your plan for the stocks in your portfolio, without considering possible future memes. Why did you buy them? Why do you hold them? When (if ever) or under what circumstances would you sell them? Etc. If you can spell that out, I’d bet you’ll have answered your own question.
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peetsperk
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Re: Any Disadvantages to a Blue Chip Stock Becoming a Meme stock

Post by peetsperk »

peetsperk wrote: Mon Jun 07, 2021 8:23 pm One of the many advantages to just buying the index is you don't have to worry about things like this. CNBC has 55 hours of investment programing they have to fill every week. Meme stocks are another byproduct of their need to exaggerate the importance of such things to increase viewership for the benefit of their true customers which include most of the big brokerage firms. Meme stocks are one of the better examples of recent noise on the Street. Afterall, it doesn't fill much of their allotted programming time to simply tell people to buy the index, even though many of their viewers would be much better off if they did. :beer
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DTalos
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Re: Any Disadvantages to a Blue Chip Stock Becoming a Meme stock

Post by DTalos »

ivk5 wrote: Tue Jun 08, 2021 3:41 am
DTalos wrote: Tue Jun 08, 2021 12:44 am
mhalley wrote: Mon Jun 07, 2021 7:49 pm When you buy a stick, You should have an ips on what to do with it. You should have a price at which you would sell the stock, whether at a loss or at a gain, the reason doesn’t it reached that price doesn’t matter.
Did not know one should have a price at which to sell. Lots ot variables involved in deciding when to sell. I would be worried about a blue chip stock becoming a meme stock, because of the reputation for volatility and what would happen if all of a sudden milions sell.
Might need to start with what is your plan for the stocks in your portfolio, without considering possible future memes. Why did you buy them? Why do you hold them? When (if ever) or under what circumstances would you sell them? Etc. If you can spell that out, I’d bet you’ll have answered your own question.

I understand. Most people would answer for future, steady appreciation. Dividends a bonus. Becoming a meme stock disrupts slow, steady, appreciation.
illumination
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Re: Any Disadvantages to a Blue Chip Stock Becoming a Meme stock

Post by illumination »

Setting aside the "sin" of owning an individual stock, I would have a stop loss on it if you find yourself in that situation. If you have a stock that goes up 1,000% in a few weeks, you probably want an exit plan. Of course, that high volatility means you could miss out on another big run.

I just don't like the idea of owning something that has a complete disconnect from the underlying fundamentals. Even the most optimistic turnaround of companies like GameStop and AMC still come nowhere near what these companies are currently valued at (imo). But I've been wrong before.
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JoMoney
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Re: Any Disadvantages to a Blue Chip Stock Becoming a Meme stock

Post by JoMoney »

So far, the popular "meme stocks" seem to be trying to play against short sellers. You don't see a lot of short action against a "blue chip" dividend payer, anyone shorting it would have to pay the dividend while they were short. "Blue chip" stocks tend to be larger stocks as well, and larger stocks can absorb more attention with less impact to the share price, so another reason less likely to be a target for people intentionally trying to move the price.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
ivk5
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Re: Any Disadvantages to a Blue Chip Stock Becoming a Meme stock

Post by ivk5 »

JoMoney wrote: Tue Jun 08, 2021 10:59 pm So far, the popular "meme stocks" seem to be trying to play against short sellers. You don't see a lot of short action against a "blue chip" dividend payer, anyone shorting it would have to pay the dividend while they were short. "Blue chip" stocks tend to be larger stocks as well, and larger stocks can absorb more attention with less impact to the share price, so another reason less likely to be a target for people intentionally trying to move the price.
+1. Easy to get seasick getting tossed around by the waves in a little dinghy, harder in the Titanic.

IAC as noted by illumination if something you're holding suddenly becomes much more volatile and you're uncomfortable holding it, you have the option to sell (including via trailing stop loss).

Yes, you'll pay taxes if it's a taxable account, but that's because you'll have realized an outsized, unexpected gain - hardly seems like a problem.
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bertilak
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Re: Any Disadvantages to a Blue Chip Stock Becoming a Meme stock

Post by bertilak »

DTalos wrote: Mon Jun 07, 2021 7:38 pm If a stock in your portfolio becomes a "meme" stock, what should one do?
One reason for investing in broad market index funds is to not have to worry about questions like this.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
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