Jim Cramer warns against meme stocks if you want a secure retirement. Here's why he thinks it's risky

Core Viewpoint - The primary investment strategy that can jeopardize long-term financial security is chasing meme stocks, which are driven by social media hype rather than strong business fundamentals [1][2]. Group 1: Definition and Risks of Meme Stocks - A meme stock is characterized by a significant increase in share price due to viral online attention rather than actual business success [2]. - GameStop serves as a classic example, where retail traders drove the stock price up by 1,600% in two weeks during early 2021, but by April 2024, the price had fallen to around $10 per share, resulting in substantial losses for late investors [3]. - The "greater fool" theory underlines the risk of meme stocks, suggesting that investors may profit from overpriced stocks only if there is someone else willing to buy them later, likening it to a game of musical chairs [4]. Group 2: Behavioral Insights on Investment Strategies - Cramer's critique extends beyond meme stocks to investor behavior, warning that excessive allocation to speculative stocks can lead to overexposure when market sentiment changes [5]. - Investments that have a clear beginning and end are discouraged, as they often rise and fall rapidly, indicating a preference for long-term ownership over short-term trading [6].