The retail community continues to move stocks more than a year after the initial meme stock frenzy in early 2021.
The founder of r/WallStreetBets, a reddit forum for retail traders to discuss stocks and options, had some advice for the community: The best financial education comes from the school of hard knocks.
“I learned a lot from my experience,” r/WallStreetBets’ Jaime Rogozinski said on Yahoo Finance Live (video above). “There is one thing in the stock market that no book can teach you, and that is to get control of your emotions and be able to think logically when you are in a trade.”
Rogozinski emphasized that traders of all levels, especially those new to trading, should not be afraid of making mistakes. Losses are bound to happen and are key to gaining market experience.
“Often, these retailers use smaller amounts of money,” Rogozinski added. “They can afford to lose 100% because we’re talking about $100 or $50, you know? It’s the price of tuition. They can go through, get their hands dirty and find what they like.”
A meme trade versus an investment
The r/WallStreetBets subreddit was created in January 2012 and now has over 12.5 million members. The page went viral for its involvement in the trading and retail frenzy that sent GameStop ( GME ) shares soaring in early 2021 and led to a congressional hearing.
“One of the things about the retailers, WallStreetBets, is that it’s a collective,” Rogozinski said. “He is not an individual. People come together and decide collectively.”
Rogozinksi explained that retailers tend to be younger and more “engaged” with their finances.
On r/WallStreetBets, “what it allows them to do is learn about it in a fun way, speaking a language that makes it accessible,” Rogozinski said. “I often say that…the concepts that CFAs, Certified Financial Analysts or [those with a] graduate, they just have a lot of jargon for concepts that aren’t really that complicated. In WallStreetBets, you have the exact same concepts, but they have easier words, or they’ll have different words that sometimes make it more cartoonish, more fun, more meme-like.”
A Gallup survey from May 2022 found that 56% of US adults, totaling 144.6 million people, own stocks, including 25% of households earning less than $40,000 a year.
While many investors invest for the long term for goals like retirement, Rogozinksi noted that meme stocks are a different animal entirely because of their unpredictable nature.
“These are not investments, they are commercial transactions,” Rogozinski explained. “And so if you want to get into a highly volatile trade like GameStop or like a meme stock, you have to know how to trade it properly.”
Meme stocks tend to be consumer-facing companies that marketers already have a relationship with, such as the aforementioned GameStop, AMC, or Bed Bath & Beyond.
“You have to have a stock for a company that’s tangible that retailers can relate to, not some obscure, I don’t know, chemical company,” Rogozinski said. “This is a store you can go to, this is a car you can drive, this is a chip you can put in your computer.”
Stock memes have “reminiscent ingredients”
Although r/WallStreetBets has been an incubator for meme stock culture, Rogozinski doesn’t consider himself a meme trader.
“I have a very particular trading style and it’s not the stock meme – I’ve never really understood that,” he said. “But I’m definitely enjoying what’s going on and it’s definitely a very new phenomenon that I’m not sure a lot of people have really mastered.”
Rogozinski’s comments came at the height of a meme-fueled rally in Bed Bath & Beyond ( BBBY ) stock. The retailer’s stock then plummeted after activist investor and GameStop President Ryan Cohen sold his 9.8% stake in BBBY for $68 million.
At the time, shares were driven to a high of $28.04 on August 16 before falling 30% on the same day. Since then, activity in the stock has eased somewhat, although shares are still up more than 92% for the month of August.
Although he didn’t personally invest in Bed Bath & Beyond, Rogozinski was still “on board” with his idea as a meme stock business.
“You can see it has a lot of similarities to GameStop,” Rogozinski said of the hype surrounding the brand and its volume of transactions. “We’re getting a lot of components reminiscent of what we saw during GameStop.”
Luke is a producer for Yahoo Finance. You can follow him on Twitter @theLukeCM.
Click here for the latest stock market news and in-depth analysis, including the events that move stocks
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for apple the Android
Follow Yahoo Finance at Twitter, Facebook, Instagram, Flipboard, LinkedInand YouTube