meme stock thread👇
1/ What is a "meme stock"?

The useful definition of a meme stock is a stock which moves as a function of its investor acquisition cost not its earnings power. Some quantitative definitions of this concept
2/ Earnings volatility is priced lower than near term volatility.

The stock is expected to move more due to near term flows/ hype than from surprises related to its operating performance
3/ Cash flow from financing/investing beats cash flow from operations

Capital must be in the driver's seat for a meme stock to really work. Distressed assets like AMC or Hertz are good meme stocks as are airlines. Tesla is a good meme stock bc it's all financing not operations
4/ Meme stocks typically have a meta-narrative. Here are some non economic meta narratives-
AnarchoCapitalism - Bitcoin
Nihilism / Loki- GME/AMC/GEO
Enlightened Statesmen - ESG/ Cleantech
Chinese Nationalism - Tencent
Futurism - ARK,
Punishing Hedge Funds - CLOV/WISH
5/ A meta-narrative can become a religion, and good religions have figureheads.
AnarchoCapitalism - Paypal Mafia
Nihilism - Roaring Kitty
Enlightened Statemen - Larry Fink
Chinese Nationalism - Xi
Futurism - Cathie Wood
Punishing Hedge Funds - Chamath
6/ At any given time meta narratives compete to become the "God Meme" - that is the meme which drives both thoughts and the market.

Right now -- Nihilism is the God meme. The Knight of Punishing hedge funds was shown as disingenuous but it doesn't matter (CLOV mooning)
7/ Nobody gives a fck about El Salvadorian drug cartels as long as Bitcoin number goes up (more Nihilism) and oil stocks are crushing ESG stocks (short term/nihilist) which are popular to decry as disingenuous while Biden keeps compromising on solar spending.
8/ Here's my force rank of memes right now
Nihilism - Roaring Kitty (God meme)
Punishing Hedge Funds - Chamath
AnarchoCapitalism - Paypal Mafia
Chinese Nationalism - Xi
Enlightened Statemen - Larry Fink
Futurism - Cathie Wood. So long $GME $XRT $GBTC short $ESGU $TAN $ARKK
9/ The weakness of Nihilism is that it's mostly a joke so has a hard time having a well organized leader. It's rare that it can persist as a God Meme because chaos involves short lived destruction that usually brings some kind of intervention (Batman, Robinhood shutting off etc)
10/ Most concepts have a sun and a moon
Nihilism/ Humor
Punish Funds / Common Man
AnarchoCap/ Freedom
Chinese Nationalism/ Order
Moral Superiority/ Future of Earth
Deflation/ Futuristic Tech
The K-Factor/ or sharability of a meme depends on if its essence is positive or negative
11/ So far we've identified meme stocks as 1] non economic / financing not operating oriented 2] hierarchical/competing for mindshare 3] defined by "Paladins" or human embodiments 4] characterized by positive and negative dynamics that increase / decrease shareability
12/ You can quantify each of these elements into a single number. How much money does it cost to acquire a new investor? The 4 elements above are largely the inputs into that formula. Meme stocks have near-zero investor acquisition cost, and the God Meme makes the cost *negative*
13/ Once you have a model you can begin mapping it into short term timeseries inputs which allow you to correlate with price. The general heuristic for making money in memes is "Always be long the god meme" and short low vol megacaps in the meme thematics that are out of favor 🌛

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