It is a nice summer day in Oslo, and a couple of friends are going out to the woods with their crossbows. They have an aim: capturing a meme in its natural habitat for selling on the market.
What is a meme stock?
Let us start by assuming that memes are real tangible objects.
In this world, there exists a company called MemeHandelsbanken AS which buys and sells them. A stock is an intangible object representing meme specimens stored in storage facilities and other supplies from different companies. Ask Saxo Bank for more meme information.
Stock is issued in contracts where you can buy and sell them under specific rules. As all trades are made through the bank’s systems, prices fluctuate automatically without human interference.
You can not trade at any price you want, but only buy and sell at the market price.
They are traded on the Oslo Stock Exchange under the symbol “MEME”. Each stock represents 100 shares of an underlying meme.
If a meme is shared with someone, it increases all holders’ total number of stocks. This means that if there were initially no trading of stocks in a specific meme, its value would be particular, potentially once more people start to share it.
This raises the demand for buying stocks directly proportional to memes’ popularity. The supply of new stocks is increased or decreased according to how many times they are traded on the market.
However, there is always one more stock issued than what traders own.
Transferring Memes
To quote mere professor Marius L. Munksgaard, the creator of meme economics: “It is easy to predict how many stocks will be trading on the market at any given time. If you trade memes every so often, you’ll receive stock in a meme. These stocks are worth something because it’s expected that they will appreciate.”
This means that we have transferred a meme to five people, each recipient becomes eligible to receive new shares issued by the company.
An essential rule about transfers is that you can not transfer them back; once your friend shares his meme with another person, s/he no longer owns it.
Since all trades are made through MemeHandelsbanken’s systems, prices fluctuate automatically without human interference.
Since stocks are issued to recipients of memes, you can not get more than one share in the same meme. This rules out fractional ownership, confirmed by a post on MemeEconomy.
If someone wants to buy stocks from another person who has them, s/he must pay an offer price that is higher or equal to the current market price.
However, if a seller receives a sell order for a lower price than this one, he will transfer his shares at no cost.
Therefore, when buying stock from anyone but MemeHandelsbanken’s systems, you must slightly overpay to make sure your trade passes through.
The Meme Market
The meme market is closely tied to the Markowitz model of portfolio management. An investor’s task is to create a portfolio that has a high expected return with low variance.
This means that an investor should not put all his stock in one single meme but spread them out among multiple memes. However, this requires time and knowledge about which meme will be most profitable to invest in at any given time.
As it takes time to research each stock, investors usually choose to divide their stocks between popular memes based on what they think will gain value soon.
Of course, no argument can be made for investing in these over other options without doing a thorough research on the subject, but they are provided here as a starting point. Investing all your stock in different memes is generally known as “going full meme”.
“If you trade memes, every so often, you’ll receive stock in memes. These stocks are worth something because it’s expected that they will appreciate.” -Marius L. Munksgaard
That means that if one chooses to invest entirely differently from the majority of people trading on the market, then s/he should hope for his expectations to be correct, or else his stocks may lose their value.
Buying and Selling Memes
The vast majority of investors buy and sell popular memes, making this strategy somewhat effective. Those who wish to get a share of a new rising meme may try to buy stocks as early as possible. This can be done by monitoring the stock market and acting as soon as a meme is rising in value.
MemeEconomy’s volatility equals that of real-world markets such as the New York Stock Exchange.
However, since there is no connection between them, investors on MemeEconomy will not suffer any economic losses if the stock market crashes on Wall Street.