You can’t keep a bad investor down. Last year, Generation Z and millennial investors piled into meme stocks, looking to make a quick killing by ramping up the prices of burnt-out companies, such as video game retailer GameStop and movie theatre chain AMC Entertainment.
Day traders lost their minds — and money — chasing instant online gratification, egging each other on through Reddit subgroups and WallStreetBets.
Some even kidded themselves that they were doing social good by sticking it to Wall Street hedge funds that have been cynically shorting these companies to profit when their shares turned to dust.
It was classic late bull market madness, fuelled by cheap money, high hopes and a fear of missing out, and ended in an entirely predictable fashion.
The GameStop share price fell from a peak of $81 in January 2021 to $10 in a month, turning virtual fun into real paper losses.
Free trading app Robinhood, which was at the heart of the action, saw its active user base drop from a high of 22 million in 2021 to about 14 million in June this year as investors ran for cover.
Many assumed the madness was over for good when this year’s bear market struck. But they were wrong.
Meme stocks are back. Investors, it seems, have learnt nothing. All it took was a flash of positive market sentiment and they whipped out their mobiles and started trading.
GameStop and AMC Entertainment once again find themselves in the centre of the storm, joined by another troubled retailer, Bed Bath & Beyond.
Traditional investors like to buy good companies with bright prospects. Meme investors do the opposite, but they have hit on one truth. Any asset is only worth what people are willing to pay for it.
Meme stocks are totally speculative but maybe that’s the point, with Bed, Bath & Beyond rocketing 500 per cent since the beginning of August, David Morrison, senior market analyst at Trade Nation, says.
“Why worry much about trying to make 1 per cent or 2 per cent a month by trading big established companies, when you can double your money in a day if you get lucky?
“And if you’re unlucky and lose money, you can always post copies of your trading statements on WallStreetBets and watch the ‘witty’ comments roll in.”
Meme stocks flew back into fashion at the same time as wider investor sentiment picked up.
“We’ve seen a sharp rally in US equities since mid-June following the protracted sell-off since the beginning of the year. There’s a growing feeling that the bottom is in and the only way is up,” Mr Morrison says.
Investors are working on the assumption that inflation has peaked and the US Federal Reserve can slow the pace of interest rate hikes, then start cutting in 2023 as the economy slows.
They should not get too comfortable with that concept, Mr Morrison warns.
Yes, inflation may have peaked, at least in the US, but the Fed funds rate is still likely to climb higher from today’s range of 2.25 per cent to 2.5 per cent.
In the UK, analysts are warning that rates could peak at 6 per cent, bringing everyone into a very different world.
US stock markets now look overbought, Mr Morrison warns. “If we get a significant pullback, the bears will be out in force again. It’s going to be a volatile end to the year.”
This summer’s meme stock revival is based on “herd sentiment and excess speculation”, just like the original, so approach with caution, Vijay Valecha, chief investment officer at Century Financial in Dubai, says.
We have entered a new era of higher interest rates with reduced global liquidity as central banks turn the taps off and this demands a different strategy.
“Markets are likely to reward only those products and stocks that provide actual value and use case options in the real world,” he adds.
Now is not the time to pursue a get-rich-quick strategy as it could end up making you poorer at an even faster rate.
“Whatever you do, don’t bet your life savings, although, unfortunately, that’s exactly what many meme-fuelled traders have been doing,” Mr Valecha says.
The summer stock rebound looks more like a bear market rally than something more substantial, Chaddy Kirbaj, vice director at Swissquote Bank, says.
Investors have been buying the dip, encouraged by the drop in US inflation in July to 8.5 per cent, down from 9.1 per cent in June.
They want to get in before the Fed starts easing in earnest and markets rocket, but Mr Kirbaj urges caution. Wall Street may be buzzing, but the real economy is in trouble.
“The underlying risks of recession, global trade disruptions, higher costs of production and increased mortgage rates are intact, so investors should be more cautious than excited about the recent market rally,” he adds.\
Mr Kirbaj notes that the 2008 crisis didn’t happen overnight, but took months to materialise. The same could happen again and even slowing the pace of rate hikes may not be enough to revive a struggling economy.
Younger investors aged between 18 and 30 are the driving force behind the meme stocks trade, Philippe Ghanem, founder of global investment gateway SquaredFinancial, says.
That is certainly the case with his company’s younger clients, who are quick to return when the sentiment picks up — and just as quick to stop trading when it falls.
This more “aggressive” investment strategy does not work in the long run, Mr Ghanem says.
“Our clients aged between 40 and 65 are much more conservative and enjoy a notably higher return on investment as a result.”
He believes “sticky” inflation will grind the life out of meme stocks.
“I believe higher inflation is now structural due to factors such as the energy transition, demographics and the cost of building resilience, and will settle around 4 per cent to 5 per cent. If this happens, the craziness should not return,” Mr Ghanem adds.
Others are not so sure, including Walid Koudmani, chief market analyst at financial brokerage XTB.
He says the recent Bitcoin rally shows that investor optimism is hard to crush.
“We could see a significant reaction if Bitcoin broke past $25,000, as returning investors may see that as a potential sign of better things to come,” he says.
The next few months could be tough, but once things ease, it seems highly likely that meme stock madness will return.
Markets have priced in further monetary tightening and are now looking ahead to when the Fed will start to reverse rate cuts to boost the slowing economy, Mr Morrison says.
“This could lead to a rally in all risk assets going into 2023,” he adds.
The current GameStop, AMC and Bed Bath & Beyond bunfight may soon be taking a time out as uncertainty returns, but we could be in for a third round of this nonsense next year. You have been warned.
LIVING IN...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
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MATCH INFO
South Africa 66 (Tries: De Allende, Nkosi, Reinach (3), Gelant, Steyn, Brits, Willemse; Cons: Jantjies 8)
Canada 7 (Tries: Heaton; Cons: Nelson)
Global state-owned investor ranking by size
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China
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UAE
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Japan
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5
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Norway
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Canada
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Singapore
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Australia
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Saudi Arabia
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South Korea
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Wonka
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%C2%A0Paul%20King%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%C2%A0%3C%2Fstrong%3ETimothee%20Chalamet%2C%20Olivia%20Colman%2C%20Hugh%20Grant%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%202%2F5%3C%2Fp%3E%0A
Pakistan T20 series squad
Sarfraz Ahmed (captain), Fakhar Zaman, Ahmed Shahzad, Babar Azam, Shoaib Malik, Mohammed Hafeez, Imad Wasim, Shadab Khan, Mohammed Nawaz, Faheem Ashraf, Hasan Ali, Amir Yamin, Mohammed Amir (subject to fitness clearance), Rumman Raees, Usman Shinwari, Umar Amin
UAE currency: the story behind the money in your pockets
It's Monty Python's Crashing Rocket Circus
To the theme tune of the famous zany British comedy TV show, SpaceX has shown exactly what can go wrong when you try to land a rocket.
The two minute video posted on YouTube is a compilation of crashes and explosion as the company, created by billionaire Elon Musk, refined the technique of reusable space flight.
SpaceX is able to land its rockets on land once they have completed the first stage of their mission, and is able to resuse them multiple times - a first for space flight.
But as the video, How Not to Land an Orbital Rocket Booster, demonstrates, it was a case if you fail, try and try again.
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Most match wins on clay
Guillermo Vilas - 659
Manuel Orantes - 501
Thomas Muster - 422
Rafael Nadal - 399 *
Jose Higueras - 378
Eddie Dibbs - 370
Ilie Nastase - 338
Carlos Moya - 337
Ivan Lendl - 329
Andres Gomez - 322
Ain Dubai in numbers
126: The length in metres of the legs supporting the structure
1 football pitch: The length of each permanent spoke is longer than a professional soccer pitch
16 A380 Airbuses: The equivalent weight of the wheel rim.
9,000 tonnes: The amount of steel used to construct the project.
5 tonnes: The weight of each permanent spoke that is holding the wheel rim in place
192: The amount of cable wires used to create the wheel. They measure a distance of 2,4000km in total, the equivalent of the distance between Dubai and Cairo.
Like a Fading Shadow
Antonio Muñoz Molina
Translated from the Spanish by Camilo A. Ramirez
Tuskar Rock Press (pp. 310)
Keane on …
Liverpool’s Uefa Champions League bid: “They’re great. With the attacking force they have, for me, they’re certainly one of the favourites. You look at the teams left in it - they’re capable of scoring against anybody at any given time. Defensively they’ve been good, so I don’t see any reason why they couldn’t go on and win it.”
Mohamed Salah’s debut campaign at Anfield: “Unbelievable. He’s been phenomenal. You can name the front three, but for him on a personal level, he’s been unreal. He’s been great to watch and hopefully he can continue now until the end of the season - which I’m sure he will, because he’s been in fine form. He’s been incredible this season.”
Zlatan Ibrahimovic’s instant impact at former club LA Galaxy: “Brilliant. It’s been a great start for him and for the club. They were crying out for another big name there. They were lacking that, for the prestige of LA Galaxy. And now they have one of the finest stars. I hope they can go win something this year.”
Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
Company%20profile
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Killing of Qassem Suleimani
UAE currency: the story behind the money in your pockets
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
Killing of Qassem Suleimani
Ronaldo's record at Man Utd
Seasons 2003/04 - 2008/09
Appearances 230
Goals 115
SERIES INFO
Cricket World Cup League Two
Nepal, Oman, United States tri-series
Tribhuvan University, Kathmandu
Fixtures
Wednesday February 5, Oman v Nepal
Thursday, February 6, Oman v United States
Saturday, February 8, United States v Nepal
Sunday, February 9, Oman v Nepal
Tuesday, February 11, Oman v United States
Wednesday, February 12, United States v Nepal
Table
The top three sides advance to the 2022 World Cup Qualifier.
The bottom four sides are relegated to the 2022 World Cup playoff
1 United States 8 6 2 0 0 12 0.412
2 Scotland 8 4 3 0 1 9 0.139
3 Namibia 7 4 3 0 0 8 0.008
4 Oman 6 4 2 0 0 8 -0.139
5 UAE 7 3 3 0 1 7 -0.004
6 Nepal 0 0 0 0 0 0 0
7 PNG 8 0 8 0 0 0 -0.458
Credit Score explained
What is a credit score?
In the UAE your credit score is a number generated by the Al Etihad Credit Bureau (AECB), which represents your credit worthiness – in other words, your risk of defaulting on any debt repayments. In this country, the number is between 300 and 900. A low score indicates a higher risk of default, while a high score indicates you are a lower risk.
Why is it important?
Financial institutions will use it to decide whether or not you are a credit risk. Those with better scores may also receive preferential interest rates or terms on products such as loans, credit cards and mortgages.
How is it calculated?
The AECB collects information on your payment behaviour from banks as well as utilitiy and telecoms providers.
How can I improve my score?
By paying your bills on time and not missing any repayments, particularly your loan, credit card and mortgage payments. It is also wise to limit the number of credit card and loan applications you make and to reduce your outstanding balances.
How do I know if my score is low or high?
By checking it. Visit one of AECB’s Customer Happiness Centres with an original and valid Emirates ID, passport copy and valid email address. Liv. customers can also access the score directly from the banking app.
How much does it cost?
A credit report costs Dh100 while a report with the score included costs Dh150. Those only wanting the credit score pay Dh60. VAT is payable on top.
The specs: 2018 Dodge Durango SRT
Price, base / as tested: Dh259,000
Engine: 6.4-litre V8
Power: 475hp @ 6,000rpm
Torque: 640Nm @ 4,300rpm
Transmission: Eight-speed automatic
Fuel consumption, combined: 7.7L / 100km
The specs: Volvo XC40
Price: base / as tested: Dh185,000
Engine: 2.0-litre, turbocharged in-line four-cylinder
Gearbox: Eight-speed automatic
Power: 250hp @ 5,500rpm
Torque: 350Nm @ 1,500rpm
Fuel economy, combined: 10.4L / 100km
World record transfers
1. Kylian Mbappe - to Real Madrid in 2017/18 - €180 million (Dh770.4m - if a deal goes through)
2. Paul Pogba - to Manchester United in 2016/17 - €105m
3. Gareth Bale - to Real Madrid in 2013/14 - €101m
4. Cristiano Ronaldo - to Real Madrid in 2009/10 - €94m
5. Gonzalo Higuain - to Juventus in 2016/17 - €90m
6. Neymar - to Barcelona in 2013/14 - €88.2m
7. Romelu Lukaku - to Manchester United in 2017/18 - €84.7m
8. Luis Suarez - to Barcelona in 2014/15 - €81.72m
9. Angel di Maria - to Manchester United in 2014/15 - €75m
10. James Rodriguez - to Real Madrid in 2014/15 - €75m
Company Profile
Founder: Omar Onsi
Launched: 2018
Employees: 35
Financing stage: Seed round ($12 million)
Investors: B&Y, Phoenician Funds, M1 Group, Shorooq Partners
