Three Worst Ideas for Stock Investing in 20231/5/2024
Investors split into two camps in the vibrant world of 2023's stock market.
On one side, the steady-handed, playing the long game with low-fee index funds. Picture them lounging comfortably, watching their investments in the S&P 500 quietly accrue value.
On the flip side are the adrenaline seekers – unable to sit still, constantly hunting for the next big opportunity. They often find themselves tangled in the stocks of companies wavering on the edge of viability.
Here's a rundown of a few investment escapades that turned out to be more a nightmare than a dream for “gambler” investors.
WeWork: A Spectacular Fall from Grace
WeWork's journey in the public eye is akin to a dramatic fireworks show – full of awe, then ending in chaos.
Once valued at a staggering $50 billion, the company's fortunes took a nosedive. This happened following a botched IPO and controversies surrounding its founder, Adam Neumann. In 2021, WeWork's valuation plummeted to $9 billion, and by 2023, the company faced bankruptcy with debts totaling $18.7 billion.
In a bizarre twist, just days before WeWork's collapse, a dubious offer from Cole Capital Funds caused its stock to spike by nearly 150%. However, this 'miracle' was short-lived. The SEC revealed the offer as a sham, and WeWork’s already fragile stock was left in tatters. This story is a stark reminder of the volatility and unpredictability of investing in troubled companies.
Mullen Automotive: An Electric Dream Short-Circuited
Mullen Automotive, a name in the electric vehicle market, presents another cautionary tale.
Despite its aspirations, the company reported sales of just $308,000 since 2021. Yet, its share count skyrocketed by an astounding 4,300% in a year, diluting its stock value to mere pennies. Mullen's spending habits further raised eyebrows. A significant chunk of its funds enriched the company’s CEO rather than fueling research and development.
This scenario highlights the need to inspect a company's financial health and priorities before investing. Mullen's story is a classic example of market hype and ambitious visions not translating into sound investment opportunities.
Bed Bath & Beyond: From Retail Giant to Meme Stock Fantasy
The saga of Bed Bath & Beyond takes an even stranger turn. Following its bankruptcy declaration, the company's stock surprisingly retained a cult following, thanks to its status as a meme stock. Investors, driven by hope and hype, clung to the stock, fueled by cryptic messages they believed were hidden in a children's book by Ryan Cohen, a former investor in the company.
This bizarre turn of events underscores the risks of investing based on speculation and social media hype. The real outcome for Bed Bath & Beyond was far less dramatic. Overstock.com acquired its assets, leaving the hopeful investors with nothing but a lesson in the unpredictability of meme stocks.
The Diverse Paths of Investing in 2023
While the thrill of potential windfalls can be enticing, it’s crucial to approach stock investing with a balanced perspective grounded in research and realism.