Investors who bought in after the 200%-plus gain likely fared worse. Approximately 30% of those stocks ended up underperforming the overall market (as represented by the Russell 3000 Index) through May 2022. Even including that unrealistic leg up, stock picking is a risky move. Suppose an investor was especially prescient or lucky and bought one of these 46 names two weeks before it notched the 200%-plus gain. Meanwhile, over the same period, the Russell 3000 Index rose 18% and with far less volatility. Diamond Hands 💎🤲, believing AMC was still en route to the moon! 🚀🌙, held on through wild swings, but after a tumultuous year finally let go and sold-down 19%. Paper Hands 🧻🤲 happened to be one of the “get rich quick” success stories with an investment that tripled in a few short months. Paper Hands 🧻🤲 then sold a few months later, on the second-highest trading-volume day, at the all-time-high closing price of $62.55. Both bought AMC on January 27, 2021, when the stock hit a record trading volume of 1.2 million shares and closed at $19.90 per share. There are many ways this story played out, but based on trading volumes and volatility as catalysts for the actions of hypothetical investors, we compare the journeys of a hypothetical “Paper Hands 🧻🤲” investor versus a “Diamond Hands 💎🤲” one. (see Exhibit 2) serves as an example of how investors’ experiences with the same security can be dramatically different. Infamous meme stock AMC Entertainment Holdings Inc. Conversely, “paper hands 🧻🤲” is an insult hurled at investors who are perceived as weak because they exited a stock position too early. Part of the meme frenzy of sending certain stocks “to the moon! 🚀🌙” relies on what members of the meme-stock community call “diamond hands 💎🤲”-which refers to investors holding onto a stock, despite the pressure of heavy losses, because they have conviction the stock price will rise again.
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