When you hear “meme stock,” you most likely think about degenerate, 20-year-old retail traders, snorting Adderall in their mom’s basement. You then probably think about the Gamestop short squeeze a couple of years ago. The craze around Bed Bath and Beyond, AMC, and now Yellow+Tupperware. Gamestop started it, but the strategy boils down to this: companies nearing bankruptcy have serious flaws, but they are at rock-bottom value. You are practically guaranteed to be buying the floor, so if they fix their debt situation or even just reach a deal with their creditors, profit is guaranteed. Now, this is a risky gamble, because if the company does go bankrupt, you lose all the money you invested.

If a company is facing bankruptcy, they’re a bad company. You’re not buying because of any inherent value, or a belief that in five years it will power your portfolio, you’re buying because of one possibility: they don’t go out of business. Yellow for example is a trucking company that is going to go into bankruptcy. As soon as they announced that inevitability, their stock shot up 585% over the following four days. Investors are expecting them to pull a rabbit out of the hat, shuffle their debt, or do something to stay in business. If they announce anything, their stock will shoot up like a rocket. Same thing with Tupperware, their stock went up 300%, and then another 400% after they announced they had reached a deal with their creditors.

Now, if this new strategy means that every stock that is about to go into bankruptcy is guaranteed to shoot up, should you just buy every company on the precipice? No, that’s stupid. Because not every company that is going bankrupt will shoot up. These companies that increase wildly in value are companies that the originally stupid Redditors, but now smart hedge fund traders have identified as companies likely to not go bankrupt. Now, you don’t necessarily have to buy the bottom in this trend to make money. For example, to my knowledge, Yellow still hasn’t gotten rid of its debt or reached an agreement. Even though they’re up 600%, if you think they will reach a deal or you have some (possibly illicit) knowledge that they will reach an agreement, you should go long or buy. Because, if that agreement does happen, they will shoot up. After that, you should get out as quickly as possible.

This is an extremely risky strategy. You used to be playing retail traders, but now you’re playing against big money, and those guys usually win. My main advice is don’t jump on the hype train just for the hype, or for the chance of that prized short squeeze. A lot of investors point towards the GME (Gamestop) short squeeze/frenzy in which the stock went up 3,000% as something practically guaranteed with these near-bankruptcy companies if enough people buy. What they don’t mention/don’t know is that the “short squeeze” was mostly fueled by purchases of stock. Not fueled by covering, and after it shot up, there was a run to get out. This is super tough, a warzone of a strategy. This isn’t something you can half-ass, you have to know practically every facet of the company’s operations to beat the market.

Final message: Only do this if you have some extra money to spend, time to spend, and decades to earn back the money you are bound to lose.