From Nasdaq: 2024-06-03 12:43:00

Efficient Market Hypothesis (EMH) is a theory that suggests equity markets are efficient and priced perfectly, leaving no room for excess profits. However, recent events like the GameStop surge debunk this hypothesis, with stocks rising based on hype rather than fundamentals.

GameStop (GME) saw a more than 50% increase after Internet personality “Roaring Kitty” disclosed owning over $100 million worth of shares, highlighting how hype can drive stock prices. Following hype trades like the “Meme stock mania” is risky, as it can lead to volatile “boom and bust” trading cycles.

Investors looking for an edge should focus on stocks with upcoming bullish catalysts. Tesla, for example, has an upcoming shareholder meeting where CEO Elon Musk’s compensation package will be voted on. Additionally, Tesla is gearing up to unveil its Robotaxi at an event on August 8th, showcasing Musk’s vision for the company’s future.

Coinbase is poised for growth with catalysts like the potential approval of an Ethereum ETF and Bitcoin’s recent breakout. The SEC is expected to approve the Ethereum ETF, which could result in significant fees for COIN as a custodian exchange. Bitcoin’s supply and demand dynamics, along with institutional adoption, could drive a breakout and boost Coinbase’s shares.

The iShares Russell 2000 ETF (IWM) could benefit from potential rate cuts, as small-cap stocks are sensitive to interest rates. Smart money like Stanley Druckenmiller is accumulating IWM calls, indicating confidence in the ETF’s performance. This focus on stocks with upcoming catalysts can help investors gain an edge and navigate market volatility effectively.

Read more at Nasdaq: 3 Stocks With Bullish Catalysts