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 🌛

• • •

Missing some Tweet in this thread? You can try to force a refresh

Keep Current with Alex Good

Alex Good Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!


Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @goodalexander

11 Jun
How do I combine my judgment with my trading in a systematized way? Human machine trading design doc. A thread 👇

1/ 7 Parts - A] Judgment Tracker B] Lab Notebook C] Backtesting Engine D] A Data Pipeline E] Execution Engine F] Risk System G] Trade Analytic System H] Dashboards
A] Judgment Tracker - track your calls over time. Google Spreadsheet with stock/ security, score rating (1-10), conviction level (1-10), expiry date (days), link to Google Document with explanation. Sheet is cached daily for historical logs. I use Gspread / Dropbox/ Python.
B] Lab Notebook - write theories down with falsifiable quant strat (i.e. web traffic leads internet stocks), link to backtest script with date. Backtest script runs t+3 months. If Sharpe is above threshhold - move into production testing. Track results. Do in Google Doc.
Read 11 tweets
8 Jun
We recently launched Put Options on Quick thread on $NFLX 400 P 2021-09-17 👇

1/ Netflix has tough comps bc of Covid last year and is expected to grow 18-20% for the next 2 quarters and then grow another 15% in 2022. I think this is unlikely
2/ First - looking at a bunch of panels of usage data Netflix is comping down double digits yoy while Zoom is flat to up. Furthermore Netflix is losing in Entertainment to ShowTime and HBO Max which are 2 & 3 vs Netflix 20 today as well as Discord (#10) and Youtube (#5)
3/ Disney said 2 main things during its investment day re Disney +. First - it sounds like the plan to outspend Netflix is very much in tact and content will drastically ramp into 2022. Second, the full benefits of relaxing social distancing should show up in Q3/Q4. What gives?
Read 11 tweets
3 Jun
One reason I'm more confident that retail has strong hands is that their "process" seems to have worked.

1/ If you'd taken Robinhood users holdings as of July last year and weighted the top 30 holdings by users, a rebalanced portfolio would have vastly outperformed the market
2/ People like to say "it's institutions, has to be". Well, FUTU has $49B AUM. 63% of volume is in US stocks. Margin Balances are up 469% year on year and assets are up 300%. They just launched an app in Singapore in March and it's already top 5 finance app. It's global retail.
3/ Despite numerous PR fiascos Robinhood has kept its rating in the app store which would align well with the FUTU balance data. Robinhood anecdotally is about $20B AUM which is much smaller than FUTU (the Chinese version)
Read 7 tweets
2 Jun
Re what asset would benefit the most from doubling balance sheet. I would answer bonds. A thread 👇

1/ In the past 12m the Fed added $3.2 Trillion to its balance sheet. A further doubling would entail $7.1 trillion - so more than 2x the covid stimulus. That's beyond extreme.
2/ The last time the Fed doubled its balance sheet was in the aftermath of the 2008 financial crisis. You can see on the graph below the ECB and BOJ have largely not doubled their balance sheets YoY. So a $7.1 trillion add would imply something came unglued like 08 Image
3/ It's understandable ppl would choose stocks/btc bc balance sheet growth of 80% in the past yr has coincided with stocks going up quite a lot. Also- you'd have made money if you'd known balance sheet acceleration in advance *buying* the S&P. Printer go Brr has indeed memed. Image
Read 10 tweets
28 May
A thread on Cognitive Behavioral Enhancement (CBE) 👇

1/ CBE is a modification of Cognitive Behavioral Therapy, an extensively clinically tested drug free treatment for depression. I went through a tough time and CBT helped. But it ended up improving my trading too.
2/ I’m not a therapist, I’ve never been clinically depressed, and I can’t say if CBT would help you.

I can say that my modification, CBE helps me work longer, take more risk, and deal with personal setbacks that would otherwise interfere with trading well. How?
3/ Three basics. A) You identify negative Feelings and Beliefs. B) You identify and honor their root cause, to overcome “therapy resistance”. C) every day you break negativity into Thoughts to be identified as untrue, harmful, or actionable (UHA). An Example :
Read 13 tweets
22 May
A thread of cool markets related content / blogs / I've come across lately on pertinent market themes 👇

1/ Damodaran (NYU value guru) recent presentation covering ESG / narratives in context of valuation…
2/ Greenlight Capital letter opining on inflation (I tend to use them as a contra indicator fwiw but always enjoy the read)…
3/ Interesting Convexity Maven Essay about "convexity vortex", yet another take on the Gamestop saga, moral hazard etc…
Read 11 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!