| Ripple Effect — July 29, 2025
In 2021, it was AMC and GameStop.
This year, it’s Kohl’s and GoPro.
They’re called meme stocks, as they’re driven by posts on Reddit’s WallStreetBets.
And bets they are.
While meme stocks sound innocuous, there is a critical factor that causes these names to get sudden interest from retail investors: a high level of short interest.
After all, if you’re short a stock and it starts to rise, you start to lose money on the trade.
That means if investors can engineer a move higher in a heavily-shorted stock, a squeeze could trigger as shorts buy to close.
That’s why heavily-shorted stocks, often unprofitable has-beens in the business world, have periods of strong performance.
That’s been the case the past few months:  Heavily shorted stocks have outperformed the past few months as the market has rebounded This outperfomrance in stocks with high short interest suggests that the meme trade is just about played out – and that investors looking to make a quick buck following a few posts on Reddit may be in for a rude awakening.
The rise of meme stocks also suggests that traders are looking for quick moves that they can’t get in the big tech names following their multi-month rally.
It’s not a sign that the markets will crash, but another hint that stocks are overheated and due for a necessary pullback.
Don’t make a new leveraged trade right now – take any leveraged trade you have off the table.
~ Addison | 
Out of 23,281 stocks... ONLY ONE is this wildly profitable and undervalued. It has more operating income than Chipotle, Hilton, or Airbnb. But its cheaper than any of them.
Get the story on this unicorn stock here. | P.S. Thanks to everyone who joined me at 10 a.m. ET this morning for my urgent announcement at the Fed.
If you missed out on that urgent briefing – I don’t know what to say. It’s incredibly timely, with a possible catalyst occurring tomorrow. I’ll see if I can get my publisher to repost it, but time is of the essence if you saw the briefing and want to take action.
That urgent situation at the Fed is playing out so fast that my announcement was a first in 30 years of forecasting market events.
I believe very strongly this could be the catalyst that cracks the greatest bull market we’ve seen since the dotcom boom and bust. If so, your retirement savings are in grave danger. That’s another reason to take some leveraged trades off the table now in today’s high-flying stock market.
As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)
How did we get here? Find out in these riveting reads: Demise of the Dollar, Financial Reckoning Day, and Empire of Debt — all three books are now available in their third post-pandemic editions. You might enjoy one or all three. 
(Or… simply pre-order Empire of Debt: We Came, We Saw, We Borrowed, now available at Amazon and Barnes & Noble or if you prefer one of these sites: Bookshop.org, Books-A-Million or Target.)
Please send your comments, reactions, opprobrium, vitriol and praise to: feedback@greyswanfraternity.com |
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