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Do meme stocks like GameStop ruin the investing experience for newbies?

Even if you didn’t catch the movie 'Dumb Money', you might remember the real story of Roaring Kitty—a.k.a Keith Gill—sparking a never-before-seen market revolution around GameStop (GME) back in 2019. It turns out Roaring Kitty and his legion were itching for round 2 this week, with a faltering attempt to reignite the meme stock rally. The events left Yahoo Finance Executive Editor Brian Sozzi and guest expert Jonathan Boyar questioning if meme stocks are ruining the experience for new investors in a new episode of the Opening Bid podcast. Though we all love a David vs. Goliath story, are these practices setting-up financially vulnerable people for failure?

Watch the full interview with Jonathan Boyar here.

Video transcript

I'm like, I have to ask a value guy about the return of the meme stock mania.

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I'll just put it over to you.

What do you think about the action we're seeing again in a company like a Gamestop and a MC?

Both of them, I would argue are distressed companies.

Uh Your argument is 100% correct.

I think it's horrible for investors.

Uh Spencer Jacob uh over at the Wall Street Journal wrote a great book a couple of years ago on this and the people who are going to be holding the bag are individual investors.

Some of the fast money, hedge funds that are probably making money off of this or will do just fine, but it's just a recipe to lose money.

There's no instant way to make money.

It's not a, you know, maybe someone will get lucky and you know, they'll sell when it goes up 200% but most likely they're just going to lose everything or most of their capital.

I think this is terrible for investors.

It's terrible for sentiment and hopefully it ends sooner rather than later.

Is it terrible for the investing process?

II, I look at these stocks and I can't help but to think there's a 21 year old out there or maybe a 19 year old or younger person thinking I have to find some way to open up a trading account.

I'm gonna try to get rich overnight and they ride up gamestop.

It's up 40% 1 day and the next day they lose it all and they never invest again.

I mean, it has to just damage the whole, the whole wealth building process.

Yeah.

It's, it leaves them with a horrible taste in their mouth.

But greed is a very powerful thing.