Cramer says meme stocks “should be offered in the casino” rather than on Wall Street
CNBC’s Jim Cramer said Wednesday that trading meme stocks is more gambling than investing.
“It is exciting. It’s fun and it’s real, ”said Cramer on“ Squawk Box ”. However, he added, “If you want to play it, I don’t know, you can go to the casino. These should be offered at the casino.” He wondered, “Why are they being offered on the New York Stock Exchange?”
The Mad Money host’s comments came as shares of new Reddit target Clover Health shot up again in the premarket on Wednesday, rising nearly 30% on the opening in the latest wild ride for insurance company Medicare Advantage plans offering extended. However, excitement waned in early trading and Clover turned negative during the session. At the daily lows, Clover stock has still more than doubled since trading closed of $ 9 on Friday.
The Reddit trading frenzy, which began in January with GameStop as its top target, has recently come back into focus. AMC Entertainment in particular is a Reddit retailer favorite. Other meme stocks that have seen varying levels of interest include Bed Bath & Beyond and BlackBerry – and a new one on Wednesday, Clean Energy Fuels, which is up about 20%.
Reddit traders have gravitated towards stocks with above-average short positions, creating the potential for what is known as a short squeeze if stocks are pushed up. Selling short is a bearish strategy that allows investors to take advantage of a stock’s falling price.
“You do everything … you have to try to figure out which one is next,” said Cramer, who previously criticized short sellers who were still betting against GameStop and AMC.
Interactive Brokers founder and chairman Thomas Peterffy also warned Shorts on Monday of the risks of stake in Meme stocks, saying they could hit “unimaginable heights” before returning to Earth. But he added that in the meantime, traders may have to cover their bets with big losses.
While newcomers to the stock market are welcome, Cramer hopes young people will focus on investing on fundamentals. He rejected the idea that the best way to learn about the markets is to get involved in trades.
“We have young people coming into the market. We have 10 million people and Reddit. They need to be educated. That’s the solution,” Cramer said. “I know it’s old-fashioned, but I think it would really help because I know some people think a lot of money has to be lost. I like people making money as long as they understand it isn’t Game is. “