Rebel Capitalist: You Won’t Believe This … Meme Stocks Are Back

It’s been three years since retail investors pushed the price of video game retailer GameStop (GME) higher. Hedge funds had shorted more than 100% of shares, leaving the stock vulnerable to a short squeeze.

The squeeze took the stock from around $5 to a peak over $250 before settling down. Part of stopping the squeeze included brokerages turning off the buy option for retail buyers. This week, shares have surged higher, then collapsed, once again.

The move started in the prior week. However, massive jumps higher on Monday and Tuesday sent shares to multi-year highs. Later in the week, shares gave back most of their gains.

And, yes, shares were somewhat heavily shorted compared to the average stock. But it was far lower than last time at 24%.

As GameStop surged higher, other “meme stocks” from the 2021 era also joined in.

The move could be a sign that markets are getting overly bullish. Typically, late market cycles see a number of stocks soar higher on little fundamental news.

However, it could also be a sign that investors are keeping an eye out for stocks that are heavily shorted. These stocks tend to perform well in a bull market.

That’s because as shares go up, the pressure rises on hedge funds to close their short position. That creates more buying pressure.

To get the latest on what’s going on with the meme stock mania, click here.