Revenge of the Meme Stocks

In a Goldman Sachs Exchanges podcast, Allison Nathan interviews John Marshall, Head of Derivatives Research at Goldman Sachs, about the resurgence of meme stocks. Marshall explains that the current meme stock activity, driven by retail traders and amplified by short covering, is about half the size of the 2021 craze and occurs roughly every six months. He attributes the recent surge to optimism surrounding crypto, blockchain, and AI, fueled by recent congressional bills. While acknowledging the rallies are short-lived, typically lasting weeks, Marshall suggests this episode may have more staying power due to retail investors' dry powder and positive market sentiment. He advises hedge funds to monitor volumes and adapt to stock-specific movements rather than relying on broad hedging strategies, noting that this phenomenon is unlikely to move the broad index significantly but signals a risk-on environment.