GameStop, for example, posted a net loss of $95 million in the third quarter of 2022. They are story-driven companies rather than businesses that have solid earnings and cash flows. The trouble with meme stocks and other speculative companies is that they are often struggling to sustainably make money. “But this year’s sharp rally and rebound in beaten down names has been an extreme example of that.” The stocks that went down a lot at the end of the previous year get bought,” said Michael Sheldon, chief investment officer with RDM Financial Group at Hightower. “At the start of every year you typically see a mean reversion. Russia funds and crypto tankedĪnother strategist agrees this recent rally for meme stocks and other speculative bets may not end well. Oil and Turkish stocks were 2022 market winners. If that happens, lower-quality stocks should get hit hard.Īctive pump jacks increase pressure to draw oil toward the surface at the South Belridge Oil Field on February 26, 2022, in unincorporated Kern County, California, approximately 141 miles (227 km) northwest of Los Angeles, California. Ristuben said he still thinks odds are greater than 50-50 that the economy is heading toward recession. I don’t agree with this market rally in meme stocks,” said Erik Ristuben, chief investment strategist with Russell Investments. Others are a little less critical of the so-called junk stock rally, but they are still worried this won’t end well. So did investors learn nothing from last year’s market meltdown? I wrote last week about how one strategist dubbed this year’s market madness as a “flight to crap.” This ETF has had an incredible start to 2023, surging more than 40%. (ROKU) and Coinbase among its top holdings. (ARKK) exchange-traded fund, a poster child for speculative bets that owns Tesla Then there’s Cathie Wood’s ARK Innovation With bitcoin rebounding from a 52-week low of about $15,600 to a current level of just under $24,000, Coinbase shares have skyrocketed an astonishing 140% since the end of 2022. Speculative investors are going all-in on crypto too. (GME), sort of the OG meme stock from 2021, are up more than 25% as well. (BBBY) has gained about 30%, despite rumors of an imminent bankruptcy filing and more store closings. (AMC) fans have given themselves on social media) has more than doubled. (AMC)’s companion preferred stock (which trades under the ticker APE as a nod to the nickname AMC (AMC) have soared nearly 65% so far in 2023, and AMC But many of the Reddit/WallStreetBets darlings of two years ago were particularly strong performers. Sure, the entire market did well in January. Meme stock mania was supposed to be over, right? Guess what: It’s not.
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