The word "stonks" is the intentional misspelling of the word “stocks” and is often used when poking fun at a particular stock or the stock market in general. As the result of a 2017 internet meme, stonks rose to popularity in early 2021 amid the surge of GameStop’s stock at the hands of Reddit users.
Learn the origin of stonks, how the word came to be so widely used and recognized, and what financial experts who work in the stock market, and even Elon Musk, think about stonks.
Definition and Example of Stonks
The word “stonks” is slang and purposely misspells the word “stocks.” It’s often used to humorously describe the stock market, especially big gains or losses. The word was first introduced in 2017 when it was used in an internet stock market meme, according to the website Know Your Meme.
“Stonks is just a goofy, often sarcastic way of saying/spelling stocks,” J.J. Wenrich, certified financial planner (CFP) and author of the book “Teaching Kids to Buy Stocks,” told The Balance via email.
The stonks meme has been circulating since 2017, rising gradually in popularity with the help of a few key spotlights. For example, Elon Musk shared a variation of the stonks meme in a June 2019 tweet. In June 2020, when someone inquired about Tesla’s rising stock price, Musk responded with a tweet that merely said “Stonks.”
How Stonks Works
If you followed any of the news coverage of the GameStop surge—or more importantly, the social media commentary—you’ve almost certainly encountered the term stonks in reference to it.
When retail investors banded together to counter a hedge fund’s short position on the GameStop stock in early 2021, the stonks meme took off.
The hedge fund shorted GameStop’s stock, betting on a decline in its share price. The stock chart, which had been a fairly flat line gradually trending lower in the preceding year, suddenly shot up astronomically as retail investors, urged by the Reddit page WallStreetBets, started buying. The share price increase hurt the hedge fund’s chances at a successful short. As the excitement grew, more and more investors joined in, many using the popular investing app Robinhood.
The entire affair eventually came to a halt, with regulatory scrutiny and Robinhood temporarily stopping trades of GameStop, but the frenzied trading is a good example of stonks. In the five years between the first trading day in January 2016 and January 2021, GameStop’s stock on average closed at $19.54, and the highest the stock price hit in trading during that time was $33.70 in April 2016. On Jan. 28, 2021, GameStop saw its share price hit a high of $483.
In the aftermath of the GameStop saga, one question that has yet to be answered is what investing in this stonks era will look like moving forward.
There’s no doubt that the GameStop event drew attention and likely acted as some people’s first interaction with the stock market. Asset management firm Hartford Funds conducted a survey to gauge investor sentiment around the GameStop surge and found that 25% of respondents had an increased interest in the stock market after the event, while 13% have already increased their stock market participation.
Moving forward, it’s likely to continue to be associated with stocks that have attracted public attention or excitement. But according to investing experts, the GameStop style of investing is one that most people should avoid.
“As always, the best thing retail investors can do is to do as little as possible,” John Stoj, financial advisor and founder of Verbatim Financial, told The Balance in an email. “Control the controllable, which is investment costs, and their own emotional reaction to the markets. Invest in as simple a portfolio of low-cost index funds as possible, matched to their personal level of risk tolerance that will allow them to remain invested without making the most emotional of retail investor decisions: buying high and selling low.”
“We understand that some clients enjoy the thrill of trading,” Aviva Pinto, managing director of wealth management firm Wealthspire Advisors, told The Balance in an email. “For those clients I always ask the question ‘if you were going to a casino, how much would you be willing to lose?’ The reason I ask that is that trading is speculative just like a casino. Someone wins and someone loses.”
Once clients give her that figure, Pinto said she segregates that into “play money,” or money they can use to speculate and does not account for it in clients’ financial plans.
- Stonks is the purposeful misspelling of the word “stocks,” often used as slang to describe the stock market or a particular stock in a humorous way.
- The term became popular in 2017 when an internet meme was created, and gained momentum in early 2021 when GameStop’s stock surged in price thanks to retail investors and social media platform Reddit.
- Investing experts advise investors to steer clear of stonks, instead focusing on trading with money they can afford to lose or long-term investments that can be used to build wealth.