QTR’s Fringe Finance: The Bull Market Just Died

There’s an old Wall Street saying: They don’t ring a bell at the top. Bull markets tend to end on wild speculation. On the notion that the party isn’t going to end anytime soon.

In time, and after a big pullback, investors can realize signs that they should have left the party. Today, investors may be seeing one such time. That’s because meme stocks are back.

Retailer GameStop (GME) saw some massive moves in recent weeks. From a low this year of $10, shares have touched on $60. While not quite the gains seen in 2021, the parallels are there.

This time around, hedge funds aren’t shore more than 100% of the stock’s available shares, or float. Since that danger is off the table, the prospect of a massive short squeeze isn’t as attractive as it has been three years ago.

Meanwhile, GameStop itself is helping to keep a lid on shares. The company has now twice announced plans to issue more shares. GameStop raised nearly $1 billion the first time it did so.

While the company’s core retail business remains at risk of obsolescence, big cash on the balance sheet could allow them to acquire another company. Or they could park that cash and earn about 5% right now.

But that kind of return pales compared to the movement in shares. And it may be an overall sign that the stock market may have hit its speculative peak for some time.

To view the full rationale on what GameStop’s recent moves mean, click here.