It may seem like everyone is holding some GameStop stock these days, but a new poll finds that very few Americans have actually made social media-driven stock purchases recently.
If you've been sitting on the sidelines, you're not alone. Only 8% of Americans have bought so-called 'meme stocks' like GameStop, according to a poll fielded among more than 700 U.S. adults last week by SurveyMonkey. These stocks' popularity is heavily influenced by online communities, such as the subreddit r/WallStreetBets (WSB).
The vast majority of respondents, 75%, say not only have they not purchased GameStop or similar stocks, but they have no interest in ever participating in community-driven trading events.
About 17% of respondents say they would like to get in on the action. And 39% of respondents believe that investing events like what's happening with GameStop create opportunities for non-professional investors to earn wealth — even if they may not want to put their own money to the test.
Over the past year, many Americans have been saving and investing more, thanks to decreased living expenses and stimulus payments amid the Covid-19 pandemic. In fact, 53% of SurveyMonkey respondents say their investing activity has increased in the last 12 months. About a third, 34%, say they've basically stayed the same on how much they invest, while about 13% report their participation has decreased.
Most consumers aren't investing in individual stocks. The majority, 58%, are using retirement accounts such as 401(k)s and individual retirement accounts (IRAs). A third say they invest using a financial advisor through a traditional brokerage.
Overall, 80% of those surveyed say they would be willing to invest in the stock market. That's good news. But chasing the squeeze of short sellers on the GameStop stock is like buying a "lottery ticket," says Lindsey Bell, chief investment strategist for Ally Invest. "You might profit, but you might also lose everything," she adds.
This type of speculative trading is more about luck and less about skill. Instead, if you are looking to invest in individual stocks, Bell recommends looking at the fundamentals of a company — earnings, cash flow, new strategy or management — that support the higher stock price moves. "If that is missing, you may want to rethink your investment strategy on a particular stock," she says.
Investing using index funds and target-date funds, which typically hold a variety of securities, are also good options. Plus, they are less risky.
"Fads and short squeezes aren't going away. It's human nature to follow the crowd, especially when it looks like the crowd is right," Bell says. "Just remember, gains are rarely this easy."