Meme stocks are rallying again – and that’s bad news for the market

• Meme stocks have climbed higher in 2023 as part of a broader rally.
• A fund that tracks retail traders’ favorites has jumped 60% year-to-date, and recently hit a one-year high.
• It’s a sign investors are picking stocks based on “animal spirits”, which could be bad news for the market.

Meme stocks are back, and that should be a warning sign to investors that this year’s surprising rally might not last.

The asset class – beloved by posters on Reddit’s Wall Street Bets investing forum, even though it’s made up of companies that are either unprofitable or riddled with debt – has staged a comeback since the start of 2023.