It’s not impossible to make money with meme stocks, but you’ll need to be extremely skilled at timing the market. Selling at the exact right moment before the price crashes is incredibly difficult, however, because these stocks — and the market as a whole — are unpredictable. If you wait just a day or two longer to sell, the price may have already crashed and you could lose money.
For that reason, you’re better off buying solid stocks and holding them for the long term. Healthy companies are likely to see their stock price grow over time, so you won’t need to worry about selling at the last second before the price drops.
2. If it seems like it’s too good to be true, it probably is
One of the biggest appeals of meme stocks is their enormous price gains. For example, Dogecoin (which is technically a cryptocurrency but also falls under the meme stock umbrella) saw its price surge by nearly 12,000% in a matter of months. It’s hard to ignore those returns, and it can be tempting to buy into these types of investments to avoid missing out on the chance to make a lot of money.
However, one of the golden rules of investing is that if it seems like it’s too good to be true, it probably is. Meme stocks may see incredible returns, but if their business fundamentals don’t align with those gains, that growth likely won’t be sustainable.