By Steve Garmhausen
If you were to eat a Krispy Kreme doughnut while sitting at your laptop negotiating a cash offer on your home from Opendoor Technologies, while filming it all on a GoPro, you might be having a great day, albeit an odd one. But you'd also be vibing with three of the poster-child companies for the latest meme-stock craze. Their stock prices rose 48%, 506%, and 103%, respectively, in July before retreating somewhat. Such stocks are 2025's answer to GameStop, AMC, and other unlikely names that surged in 2021 on the power of social media-connected retail investors. What fuels these meme-stock crazes, and should investors jump in? If so, how? We put those questions to investment pros for this week's Barron's Advisor Big Q.
David Lundgren, chief market strategist, Little Harbor Advisors: The base-case response is you shouldn't play meme stocks. But it would only be catastrophic if you did it irresponsibly. Don't do it with any more money than you would take to Vegas. Because there's no difference -- it's literally like going to Vegas. The returns can certainly be eye popping, although they're not even close to the biggest gains we saw in 2021. But look at the meme stocks from the last craze. AMC, for example, was up 3,800% in 20 weeks. But since it peaked, it's down 99%. All of those stocks are down a ton. Between the moment they bottomed and the moment they peaked, you made a ton of money. But if you took them as something beyond a silly, speculative meme trade, you ended up losing 99% of your money.
So you're better off watching it from the sidelines. I love to watch the UFC, but you won't catch me going into the ring because I'll get my ass kicked. Meme stocks are the same thing. It's a lot of fun to watch, but just watch it. The statement "There is nothing new under the sun" goes all the way back to the Bible; it's in Ecclesiastes. They had the wisdom 2,000 years ago to say that humanity never changes. And here we are today. This is just another meme craze that will absolutely end badly. If you choose to participate in it, do it with small amounts of money and try to be nimble. If you manage to make anything, count your blessings and move on. But the greater chance is that you're going to lose money.
Richard Ward, chief investment officer, Curated Wealth Partners: We definitely don't recommend that clients even play these names. Our clients will often have play accounts where they trade shorter-term views, but this group of stocks in particular is really difficult to time. For example, Krispy Kreme was up as much as 39% on a recent trading day, only to finish that day up 4%. It's really hard to figure out what side of that trade you're going to be on, even if you're using speculative capital. So I generally would try to talk clients out of it.
I've been doing this a long time. When we see this kind of speculation, certainly at the top of a bull market when most days we're hitting all-time highs, it makes me feel we're pretty much due for a pullback. And as you've seen before, when the music stops playing at these parties, people get carried out on stretchers. History has probably informed that view. I started my career during the dot-com bubble. It kind of reminds me of that at times. This also tells me that there's a lot of liquidity still in the system, and that capital is probably not constrained enough. And zero-day options allow people to play this stuff with a really small commitment of capital, so you find nurses, beauticians, people who aren't in markets every day, trading meme stocks.
Sameer Samana, head of global equities and real assets, Wells Fargo Investment Institute: This is more of a phenomenon for those who use social media to engage with their peers. If a client came to me asking about meme stocks, I would respond on a stock-by-stock or sector-by-sector basis. There's always been this concept I'll call mad money, where people have felt that they wouldn't mind taking a small portion of their portfolio and seeing if they can better their lot in life at a faster pace than they might get with a 60/40 portfolio. If it keeps the bulk of a person's assets on track, I guess we would have no issues with it. But I would want the bulk of their assets to remain in that profiling, dollar-cost averaging, rebalancing, allocating arrangement, all those kinds of tried-and-tested rules of investing.
When there's a lot of liquidity in the system, it tends to go to a lot of places. The last time all the arrows pointed toward just greater liquidity was probably in 2021, and that came to an end with the Fed pivoting to interest-rate hikes in 2022. This time is no different. We're still spending a lot of money, if you look at fiscal spending on a deficit-to-GDP basis. We continue to be at levels that are consistent with the kind of spending we do after recessions, yet we're in the midst of an economic expansion. So when you combine that level of fiscal spending, and you lock it in through the One Big Beautiful Bill Act as far as the eye can see, that basically ensures that we're probably going to have plentiful liquidity for the next few years.
Stephen Kolano, chief investment officer, Integrated Partners: It's speculation in its purest form, so take it for what it's worth. It's not part of the financial plan. If you compare 2021 to now, it seems like market conditions tend to spur the interest in these things. Markets usually have upward momentum and are trading at or near all-time highs, and everyone's kind of euphoric. That's when you need to emphasize to clients that this is just pure speculation and nothing else. It really magnifies the idiosyncratic risk in individual companies. We emphasize that with a big bet on an individual company, the company could miss earnings, or could have a product launch that goes poorly, and the risk is amplified.
It also seems that options and margin debt are being used more now than in 2021, which was all about Roaring Kitty on a Reddit board. I saw one stat to the effect that margin debt in the New York Stock Exchange is now higher than it was in the tech boom. So people are really trying to amplify the speculation on top of the idiosyncratic risk. It also seems that the short-interest dynamic is starting to play into the options market. Short interest has skyrocketed off the bottom in Kohl's and Cracker Barrel in particular.
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July 30, 2025 15:35 ET (19:35 GMT)
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