Source: S&P Global Market Intelligence. The Meme Stock Score or “Average Stock Attention Score” is calculated as a stock’s average daily dollar trading volume over the last month divided by the stock’s total market capitalization.
Ever since the creation of stock markets, investor emotions and enthusiasms have played a major role in driving prices. In the past few years, however, the amount of emotional trading may have reached a historic apex, as groups of shut-in amateur investors piled stimulus money into fun-seeming stocks with little regard to economic fundamentals. Thus emerged high attention “meme stocks.” Valuations went vertical, then fell precipitously. Short sellers suffered, and some even closed up shop. By any qualitative assessment, the action in stock markets appeared unprecedented.
Source: S&P Global Market Intelligence.
Source: S&P Global Market Intelligence.
The early 2020s put investors into uncharted territory, surpassing the peak of the dot-com bubble. The examples above show returns to “Meme” and “Not Meme” portfolios – first, through the peak and crash of the dot-com bubble and, second, from 2018 to today.
Source: S&P Global Market Intelligence.
Attention-getting meme-like stocks are a thrill to hold as they become objects of interest, but in the long run reaching meme status has not historically been a favorable achievement. The chart above shows in blue a portfolio of stocks, rebalanced monthly, that in the previous month reached meme status by turning over their entire market valuation in a single month. As you can see from the trajectory of the blue line, buying “High Attention” meme-like stocks as attention is peaking has a negative expectation. The green line, meanwhile, shows “Remaining” stocks – those that did not reach the trading volume/attention threshold. Their historical returns have been much more positive than those of their “High Attention” cousins.
Click on the desired ticker to see historic Meme Stock Factor score below the table.
Counterpoint collects market, fundamentals, and other financial data from S&P Global Market Intelligence to analyze a tradable universe of global stocks. The returns displayed above are re-calculated daily based on live market and financial data.
The Meme Stock Score is calculated as a stock’s average daily dollar trading volume over the last month divided by the stock’s total market capitalization.
The “Average Stock Attention Score” is calculated as the percentage of stocks in the market at any one point in time that have a meme score above 0.05, which represents a stock averaging daily turnover volume of 5% of its market capitalization for the last month. This is equivalent to a full turnover of the total market capitalization over the last 20 trading days, which approximates to one month.
The “High Attention” portfolio represents a monthly rebalancing basket of all U.S. stocks above $100 million market capitalization that had total monthly dollar turnover greater than their market capitalization during the preceding monthly period. “Not High Attention” characterizes all of the remaining stocks above $100 million of market capitalization. These return calculations assume no transaction costs or market frictions. These returns do not represent the returns of the Funds’ models. View the fund’s top 10 holdings.
Past performance does not guarantee future results. Investing involves risk, including loss of principal. There is no guarantee that this, or any, investing strategy will be successful.
Investing in Meme stocks and or High attention stocks involves risk. These stocks may experience major volatility. High interest in these types of stocks may encourage rapid into or out of “buzzy” stocks. Technology and social media can pump up interest in stock, and it can also create an echo chamber, one in which investors may find themselves communicating most frequently with others with similar interests and views, thereby reinforcing their views, even if these views are speculative or biased.
How should an investment advisor think about building a portfolio for clients? Or how should an investor think about building a portfolio for themselves? Many
“Challenging,” is how we’ve heard several investors describe the post-COVID investment landscape. Many investors have been caught wrong-footed over the past few years – failing
Watch Counterpoint’s Spring 2024 equity update presented by Chief Research Officer, Joseph Engelberg Ph.D. and Daniel Krause, Partner & Head of Sales at Counterpoint Funds
How should an investment advisor think about building a portfolio for clients? Or how should an investor think about building a portfolio for themselves? Many
“Challenging,” is how we’ve heard several investors describe the post-COVID investment landscape. Many investors have been caught wrong-footed over the past few years – failing
Watch Counterpoint’s Spring 2024 equity update presented by Chief Research Officer, Joseph Engelberg Ph.D. and Daniel Krause, Partner & Head of Sales at Counterpoint Funds
Mutual Funds involve risk including the possible loss of principal. Investors should carefully consider the investment objectives, risks, charges and expenses of the funds managed by Counterpoint Funds. This and other important information about the funds is available in their prospectuses, which can be obtained at counterpointfunds.com or by calling 844-273-8637. The prospectuses should be read carefully before investing. The Counterpoint Funds fund family is distributed by Northern Lights Distributors, LLC member FINRA/SIPC. To reach the Counterpoint sales team, please refer to our contact page.
Copyright © 2022, S&P Global Market Intelligence (and its affiliates, as applicable). Reproduction of any information, data or material, including ratings (“Content”) in any form is prohibited except with the prior written permission of the relevant party. Such party, its affiliates and suppliers (“Content Providers”) do not guarantee the accuracy, adequacy, completeness, timeliness or availability of any Content and are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such Content. In no event shall Content Providers be liable for any damages, costs, expenses, legal fees, or losses (including lost income or lost profit and opportunity costs) in connection with any use of the Content. A reference to a particular investment or security, a rating or any observation concerning an investment that is part of the Content is not a recommendation to buy, sell or hold such investment or security, does not address the suitability of an investment or security and should not be relied on as investment advice. Credit ratings are statements of opinions and are not statements of fact.
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