AMC is America’s best performing stock: don’t buy it
Here we go again. The stock of the cinema chain AMC
It would be an amazing move for any stock. To AMC, that sounds downright crazy. According to CNBC, US movie ticket sales fell 80% in 2020. AMC lost $ 4.6 billion last year, largely thanks to COVID.
But AMC was bleeding money long before the pandemic. In 2019, he lost $ 149 million. This is because AMC’s core business, selling movie tickets, is continually being disrupted by a devastating double blow:
Streaming video allows anyone to watch almost anything from their couch. And high-quality TVs have become so ridiculously cheap that almost anyone can afford a beautiful 65-inch flat screen that puts cinemas to shame.
And yet, AMC is the best performing stock in America this year, with a stunning 2,230% increase. Now, if this sounds familiar to you, it should. AMC made a similar decision five months ago.
In January, stocks jumped 300% in one day… and a staggering 870% in 3 weeks. So why is AMC suddenly flying off again?
It has nothing to do with reopening America. Or the new box office hit “A Quiet Place Part II” No: AMC went ballistic for the same reason as before.
Army of young traders use social media to inflate
In short: Thousands of traders flocked to the Reddit “WallStreetBets” forum and touted AMC, convincing everyone they could buy the stock. All in order to stick to the big hedge funds that bet against AMC. Now AMC rewards these merchants with free popcorn:
And it’s not just AMC that is exploding. GameStop
It is the third best performing stock in America, up 1.135%! BlackBerry (BB)– You remember ? – jumped more than 100%. Bear Building Workshop (BBW) is up 327%.
Until this year, we have NEVER seen anything like it. Newbie retail investors band together to pump stocks, and it in fact job? Now, it has happened twice in five months. And I believe that’s just the start. But now investors are asking, how can they profit from it?
Friends, that’s the wrong question
Don’t waste your time and money trying to launch the next high-flying “meme stock”. AMC, GameStop and BlackBerry are what we call ‘rocket in a bottle’ actions.
In other words, they can explode quickly. But because their underlying activities are poor, they are virtually guaranteed to return to Earth. Take GameStop: After soaring earlier this year, it fell 85% in one month:
Unfortunately, many investors see these stocks skyrocket in the news and decide they want to profit from the “easy money”. So they blindly pour money and get burnt. Please: DO NOT hunt bottled rocket stocks.
Ask yourself: Would you be comfortable owning these stocks in 6 months? The answer is no. Their businesses are probably on the way out.
Now we know that some investors don’t care about this. They just want to play. And take part in this exciting story. If this is your case, make sure you keep the size of your positions in these stocks. small. You must be prepared to lose your entire investment.
And keep in mind it will be another AMC and GameStop
For a simple reason: the “kids” take control of the stock market. Young investors have crammed into stocks like never before in 2020. Online broker Charles Schwab gained a record 4 million new clients last year. More than half of these new investors are under 40 years old.
In fact, Americans opened 10 million new brokerage accounts in 2020. And more than half of them were from Millennial favorite Robinhood. As you may know, Robinhood is a disruptor in the financial world. He was the pioneer of free trading. And its smartphone app lets you buy and sell stocks with the flick of a button.
The disruptor now has over 15 million customers and their median age is 31. Guess how old the average Millennial will be this year? 32.
What happened with AMC and GameStop is a big deal. This shows that these young investors can move the markets. And that strength is 100% here to stay. Here are the main takeaways: A whole new generation, the largest and most educated generation in American history, is going public for the first time, together.
Again: this does not means you should buy inventory of dangerous bottled rockets. But that means you need to get ready and start buying the right actions as this massive change shifts into high gear. I’m talking about stocks that can prepare you for generational wealth, not just “flash in the pan” wealth like AMC and GameStop.
At RiskHedge, we focus on “disruptive” actions
Disruptors are companies that create and transform all Industries. In other words, disruptors invent the future. (This is the opposite of what AMC and GameStop do.)
Today, my focus is on disruptors with a long growth path ahead. And one of my favorite disruptors right now is Shopify (SHOP).
Receive my report “The big disruptors: 3 revolutionary actions ready to double your money”. These actions will earn you 100% gains as they disrupt entire industries. Get your free copy here.