MW Do soaring 'meme stocks' and 'story stocks' signal a warning for investors?
By Philip van Doorn
Also: Why Tim Cook should keep running Apple, three critical questions for investors from Barry Ritholtz and how to use ChatGPT when researching investments
Do you remember the "meme stocks"? This craze peaked early in 2021, when traders bid up heavily shorted stocks of companies with weak business models, such as GameStop Corp. (GME) and AMC Entertainment Holdings Inc. $(AMC.AU)$, in an attempt to set up short squeezes.
A short squeeze takes place when short sellers scramble to buy shares of companies they have bet against, in order to cover their positions - the action can cause stocks to pop. The problem with riding a short squeeze is that if your timing isn't close-to-perfect, you can lose your shirt.
Joseph Adinolfi covered renewed meme-stock trading activity and that of "story stocks," which have been soaring on the basis of ideas and themes, rather than on direct prospects for increasing profits. An example is Aeva Technologies Inc. (AEVA). The stock of this unprofitable company was up 546% for 2025 through Thursday. This is why riding the ideas, rather than fundamentals, can lead to brutal losses for investors.
More: Stocks with lots of social-media buzz are crushing it in 2025. Why one strategist thinks the trade has gone too far.
Tim Cook should stay on at Apple
Shares of Apple Inc. $(AAPL)$ were down 15.9% for 2025 through Thursday, while the S&P 500 SPX was up 7.8%, both with dividends reinvested, according to FactSet.
The recent underperformance for the stock and idea that Apple has been slow in developing or adopting artificial-intelligence technology in iPhones has led to some calls for a change at the top.
Mark Hulbert made the case for Tim Cook to remain as Apple's chief executive, in part because of how well Cook has managed the company's collaborative method of developing products and services. Hulbert also cited a previous period of underperformance for the stock during which another executive was suggested to replace Cook. Hindsight can provide a useful reminder that investors might be better-served thinking long-term.
When is it time to break up?
Kraft Heinz Co. $(KHC)$ was formed through a complex and expensive merger in 2015. Following a report that the company was considering separating into smaller units, Mark Hulbert explained how the merger ultimately destroyed billions of dollars in shareholder value, and how corporate breakups can make money for investors.
Bill Peters reported on suggestions by analysts of other food giants that should consider breakups or spinoffs.
A successful corporate breakup: GE's stock leaps to 25-year high after blowout earnings, as jet engine orders soar
And maybe a marriage in the works: M&A chatter swirls around Union Pacific and Norfolk Southern. This is why a deal makes sense.
Lessons from stock-market cycles
The Need to Know column provides daily insight from professional money managers about trading and long-term investing ideas. You can sign up to have the newsletter waiting in your inbox each business morning.
This week John Neff explained why he was increasing cash within his portfolios and the lessons he had learned through decades of investing and Deutsche Bank macro strategist Henry Allen explained how investors kept making incorrect assumptions about the Federal Open Market Committee's interest-rate policies.
Your financial adviser should be asking these questions
Beth Pinkser is a certified financial planner who writes the Fix My Portfolio column. She helps investors manage investment risks, with a broad approach that encompasses retirement accounts as well as tax and estate-planning strategies. This week Beth interviewed Barry Ritholtz, a well-known financial adviser and author of "How Not To Invest."
When responding to questions about investment-portfolio allocation from a MarketWatch reader, Ritholtz said that, in order to answer those questions, the investor would have to answer these three important questions first.
More from Beth Pinsker:
-- I'm 68 and want to help my son buy a house. But will taking $100,000 from my 401(k) hit me with a huge tax bill?
-- I'm doing Roth conversions, but my IRA balance keeps going up. When do I stop?
A question about Social Security timing and part-time work
Alessandra Malito writes the Help Me retire column. This week she answered a question from a 67-year-old woman who has not yet started to collect Social Security benefits. She wants to wait until she is 70 in order to maximize the payments. The question: Could switching from full-time to part-time work cause her eventual monthly benefits to decline?
More from Alessandra Malito: Medicare Part B premium hike could wipe out some recipients' Social Security increases
Related: Retiring with $1.3 million? Here's what that really means.
Have a Coke and a sugary smile
President Trump expanded his portfolio of public statements by announcing that Coca-Cola Co. (KO) would switch to sweetening its flagship beverage with cane sugar, rather than corn syrup. Some fans of Coke prefer the version bottled in Mexico, which uses cane sugar.
Coca-Cola made a vague public statement following Trump's remarks. The company didn't confirm that it would make the indicated switch to cane sugar.
Charles Passy took a deeper look to into whether or it would be worth paying more for Coke made with cane sugar.
Surprise: Americans seem fine with Coke and corn syrup.
A stringent screen of dividend stocks
Some investors prefer to hold stocks of companies that pay dividends, and they might look hard for high yields. But a high dividend yield can also be a signal that better-informed investors expect a company to lower its payout. Here is a screen designed to identify stocks whose dividends are unlikely to be cut - the six stocks that passed the screen have dividend yields as high as 6.58%.
Consider a 15-year mortgage loan
Some home buyers, or people looking to refinance their mortgage loans, might not be looking deep enough into their options. Aarthi Swaminathan explained why a 15-year loan might be much better for you than a 30-year loan.
More real estate coverage from Aarthi Swaminathan: Builders are pessimistic about the housing market, throwing out 'outrageous' incentives to reel in buyers
How should AI be used when making investment decisions?
If you want to use ChatGPT when making investment decisions, getting useful results is not as simple asking a question and reading the answer. Laila Maidan explained how professional money managers use multistep processes to get useful information from AI services.
Don't miss: Fed governor reveals the ways the central bank is now using artificial intelligence
Don't make this mistake when planning for long-term care
Long-term care for the elderly is something nearly every family has to handle, and it can be very expensive. Jessica Hall covered a common misconception about long-term care and Medicare.
Read on: Medicaid, ACA costs will keep rising - and this insurer's stock is tumbling
Inheritance and estate planning with the Moneyist
This week Quentin Fotttell - the Moneyist - helped MarketWatch readers though some complicated inheritance and estate-planning scenarios:
-- Can my husband contest his late brother's $600K will? He experienced oxygen deprivation due to COPD before he died.
-- 'She's in a shaky marriage that could soon end': Will my daughter's husband get my IRA when I die?
-- My grandmother disinherited my father, yet made him executor of her will. Now he refuses to file for probate.
More from the Moneyist: My daughter has $500K in med-school expenses. Can my wife and I afford to pay it off?
Want more from MarketWatch? Sign up for this and other newsletters to get the latest news and advice on personal finance and investing.
-Philip van Doorn
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 18, 2025 12:43 ET (16:43 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.